April PCE Inflation Lowest Since February 2021

April's Personal Consumption Expenditures (PCE) Price Index rose 2.1% year-over-year, slightly below expectations and the lowest since February 2021, while core PCE inflation met forecasts at 2.5%. Both measures support the view that inflation is gradually moving toward the Federal Reserve's 2% target. Strong personal income growth continues to bolster consumer resilience amid these trends. Economists warn that recently announced tariffs could temporarily push inflation above 3.5% later in the year, although this is expected to be a short-term effect. The moderation in inflation may give the Federal Reserve flexibility to consider interest rate cuts later in 2025, but future policy decisions will depend on how trade policies influence prices and supply chains.