|Joachim Fels – Global Economic Advisor – PIMCO
Not So Fast
After spending 57 months below the Federal Reserve’s 2% inflation objective, the headline U.S. index of personal consumption expenditures (PCE) rose by 2.1% in February. Although this looks like cause to celebrate, there are some other key measures that need to be looked at. First, four months above versus 57 months below an inflation target isn’t well-balanced economic performance. Second, core PCE inflation rose to only 1.8%. Lastly, headline PCE inflation is likely to fall back below 2% again over the next few months as oil prices stabilize.