Fed’s Preferred Inflation Gauge Up 6.4% in February to Four-Decade High

Bitcoin remained roughly flat after the release of the Commerce Department's report.

AccessTimeIconMar 31, 2022 at 1:12 p.m. UTC
Updated May 11, 2023 at 4:57 p.m. UTC

The Federal Reserve’s preferred inflation gauge, the personal consumption expenditures price index (PCE), showed annual inflation rose 6.4% in February, the Commerce Department's Bureau of Economic Analysis reported Thursday.

The inflation rate accelerated from the 6% clip reported a month ago. The February pace was the highest since 1982.

Some crypto traders watch inflation readings closely because the bitcoin (BTC) market sometimes moves after economic indicators are released. Some investors hold bitcoin as a protection against inflation. The cryptocurrency was little changed after the report was published, changing hands at around $47,500 at press time.

The report also showed that consumer spending slowed to 0.2%, from 2.7% in January.

While the consumer price index (CPI) is regarded as the most widely watched inflation tracker, the Fed prefers to look at the PCE report, which reflects the prices that people spend for certain goods and services and how their spending behavior changes when prices rise.

The U.S. central bank says that the PCE offers a better representation of inflation, partly because it encompasses a broader range of costs.

Inflation remains high as the war in Ukraine is causing natural gas prices to skyrocket and as supply chain issues are bringing food prices to new highs.

On Friday, the Bureau of Labor Statistics will release its monthly jobs report. According to Dow Jones, economists expect 460,000 jobs were added in March and an unemployment rate of 3.7%, down from 3.8% in February.

With the Fed’s dual mandate to promote employment and keep prices stable, if the jobs report shows a tighter-than-expected labor market, the Fed may be more aggressive in raising interest rates.


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Helene Braun

Helene is a New York-based reporter covering Wall Street, the rise of the spot bitcoin ETFs and crypto exchanges. She is also the co-host of CoinDesk's Markets Daily show. Helene is a graduate of New York University's business and economic reporting program and has appeared on CBS News, YahooFinance and Nasdaq TradeTalks. She holds BTC and ETH.