US Core PCE Inflation Falls to 3.0%, But Long-Term Interest Rates Remain Elevated

The US core PCE inflation rate has fallen to 3.0%, but long-term interest rates remain elevated.

This mixed picture suggests that inflation is easing at the margin, yet demand has not yet decelerated noticeably in tandem.

According to Federal Reserve officials, there are differing views on the pace of further tightening, with Kashkari stating that the Fed will take necessary measures to bring inflation back to its target, but he does not know how high interest rates will ultimately need to rise.

Williams has emphasized that there is no immediate urgency for further rate hikes, assigning different weights to the persistence of inflation and the costs of additional tightening.