U.S. inflation barely rose in March as consumer spending remained tepid, making it less likely that the Federal Reserve will be able to hike interest rates twice this year.
The Commerce Department said on Friday the personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, edged up 0.1 percent last month after an upwardly revised 0.2 percent increase in February.
Last month’s gain in the so-called PCE was in line with economists’ expectations. In the 12 months through March the core PCE rose 1.6 percent after advancing 1.7 percent in February.
The core PCE is the Fed’s preferred inflation measure and is running below the U.S. central bank’s 2 percent target. The Fed said on Wednesday its policy-setting committee was continuing to “closely” monitor inflation.
It left its benchmark overnight interest rate unchanged and suggested it was in no hurry to tighten monetary policy further. It hiked rates in December for the first time in nearly a decade.
Fed officials earlier this year forecast two more rate hikes for 2016. But market-based measures of Fed policy expectations are mostly leaning toward one rate increase this year.