Cooler Inflation Supports Case for Fed Rate Cuts: Economists

Three- and six-month annualized inflation rates are below the Fed’s target rate of 2 percent.

A woman checks items from the refrigerated section while grocery shopping at a supermarket in Alhambra, Calif., on July 13, 2022. Frederic J. Brown/AFP via Getty Images

The Federal Reserve’s preferred inflation gauge edged higher in December 2023, although economists argue that the broader trends keep the door open for early cuts to interest rates.

Last month, the annual Personal Consumption Expenditures (PCE) price index was unchanged on an annual basis from November 2023 at 2.6 percent, but rose by 0.2 percent on a monthly basis, according to the Bureau of Economic Analysis (BEA).