Fed: The Fed’s preferred gauge of underlying inflation appears to be cooling.

The Fed’s primary inflation gauge appears likely to show some relief from stubborn price pressures, supporting the central bank’s caution about the timing of rate cuts.

Economists expect the price index for personal consumption expenditures excluding food and energy, scheduled for Friday, to rise 0.2% in April. This would represent the smallest advance to date on the bill, which would provide a better snapshot of inflation as of this year.

The overall PCE price index is probably up 0.3% over the three months, according to a mid-term forecast from a Bloomberg survey. This year’s growth contrasts with relatively flat figures in the final three months of 2023, highlighting the Fed’s uneven progress in the fight against inflation.

Federal Reserve Chairman Jerome Powell and his colleagues have stressed that they need more evidence that inflation is on a sustained path toward their 2% target before cutting interest rates, which have hit a 20-year high since July. The PCE price indicator is expected to rise 2.7% annually, while the core indicator is expected to rise 2.8%. Both indicators are consistent with previous month levels.

Officials earlier this month were united around a desire to keep interest rates in place longer, and questioned whether “many” policies were restrictive enough to bring inflation down to target, according to minutes from the last meeting. The latest inflation figures are accompanied by personal spending and income figures.