📝Core PCE Data Supports A Fed Rate Hike In May: Wells Fargo

Inflation is slowing, but only gradually. The core PCE deflator rose slightly less than expected, up just 0.3% in February, and inflation data for January were revised lower as well. This is a positive development, but a win can't yet be declared. The Fed has further work to do to get inflation back to its 2% target. The core PCE deflator is still running well-above target at a 4.9% annualized rate the past three months. We'd summarize the inflation development as a step in the right direction, but we think the elevated readings keep the heat turned up on the Fed, and thus still expect the Fed to hike rates an additional 25 bps at its May monetary policy meeting.

- Wells Fargo