Fed's preferred inflation measure hits three-year high, keeping talk of possible rate hike in play
Key takeaways
- Warsh announced interest rates would remain unchanged.
- The Personal Consumption Expenditures index rose 4.1% in May, in line with expectations, and up from 3.8% in April.
- Excluding volatile energy and food prices, the way the Fed prefers to assess the inflation gauge, "core" PCE rose 3.4%, in line with expectations, and up from 3.3% in April.
Fed's preferred inflation measure hits three-year high, keeping talk of possible rate hike in play UNITED STATES - JUNE 17: Federal Reserve Chairman Kevin Warsh conducts a news conference after a meeting of the Federal Open Market Committee on Wednesday, June 17, 2026. Warsh announced interest rates would remain unchanged. (Tom Williams/CQ-Roll Call, Inc via Getty Images) · Yahoo Finance · Tom Williams via Getty Images Jennifer Schonberger · Senior Reporter Updated Thu, June 25, 2026 at 7:47 PM GMT+7 2 min read The Federal Reserve's preferred inflation gauge showed prices heated up to the highest level in three years, likely keeping the central bank holding interest rates steady with an eye toward hiking if inflation doesn't dissipate.
The Personal Consumption Expenditures index rose 4.1% in May, in line with expectations, and up from 3.8% in April. Month-over-month, inflation rose 0.4%, a tenth of a percentage point less than expectations and the same level as April.
Excluding volatile energy and food prices, the way the Fed prefers to assess the inflation gauge, "core" PCE rose 3.4%, in line with expectations, and up from 3.3% in April. Month-over-month, core inflation rose 0.3% vs. 0.2% in April. This marked the highest level since October 2023.