The latest report shows that inflation in the U.S. rose again in December 2024, which is important for everyone. The Personal Consumption Expenditures (PCE) inflation, a key measure the Federal Reserve uses, went up by 0.3%. This means that prices are higher overall, pushing the annual inflation rate to 2.6% compared to 2.4% in November. The Federal Reserve usually aims to keep inflation at around 2%, but right now, prices are still a bit high.
What About Core PCE Inflation?
The core PCE inflation, which does not include the unpredictable prices of food and energy, is also important. In December, it rose by 0.2% from the previous month, keeping the yearly rate the same at 2.8%. This steady number helps experts understand what’s really happening with inflation without the ups and downs of food and energy prices.
How Is the Federal Reserve Responding?
Despite the higher inflation numbers, the Federal Reserve decided to keep interest rates the same. Chairman Jerome Powell said that they are being careful and want to see clear improvements before making any changes. This is important because it helps keep the economy stable and aims to lower inflation over time.
What’s Happening in the U.S. Economy?
In the fourth quarter of 2024, the U.S. economy grew by 2.3%, which is good news! However, people are spending cautiously, with consumer spending only rising by 0.7% in December. Additionally, the personal savings rate dropped to 3.8%, which means folks are using more of their money, likely because prices for things are going up.
Stock Market Reactions
After the PCE data was released, U.S. stock futures showed positive movement. Major stock indexes, like the Nasdaq, S&P 500, and Dow Jones, saw increases. This indicates that even with inflation worries, investors are feeling hopeful about the economy right now.
FAQs
– What is the current core PCE inflation rate for December 2024? The core PCE inflation rate for December 2024 remains steady at 2.8%.
– Why did the Federal Reserve keep interest rates unchanged in December 2024? The Federal Reserve kept interest rates unchanged to carefully monitor inflation trends and focus on economic stability.
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