PCE inflation jumps - Fed listens


**Fast price and wage growth keeps Fed on track for big interest rate increase.**

**By Jeanna Smialek and Ben Casselman, The New York Times, 4/29/2022**

**The price index that the Federal Reserve watches most closely, the Personal Consumption Expenditures price index, climbed 6.6 percent in the year through March, the fastest pace of inflation since 1982 ...**

**Price increases were heavily driven by goods shortages in 2021, but costs are now climbing briskly across a range of services, which could be make quick inflation more persistent. As employers struggle to hire enough workers to meet strong consumer demand, they are paying higher wages. Rising labor expenses could prompt some businesses to charge more, and bigger paychecks help households to continue spending on furniture, restaurant meals and other goods and services....**

**Pay still isn’t keeping up with inflation, however, at least on average...Over the past year, total compensation has fallen 3.7 percent after adjusting for inflation...** [end quote]


There’s no question that the Fed will raise the fed funds rate 0.5% at their meeting next week. It’s anyone’s guess when they will stop raising since they are seeking a “neutral” rate that won’t stimulate inflation.


The stock market is seeing tremendous volatility – daily swings of ± 2% or more.