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3w ago

U.S. Inflation Slows to 2.1%, Closing in on Fed’s 2% Goal

After holding rates steady since January, the Fed confronts lingering tariffs left intact by a court pending appeals

A shopper surveys goods on display in a Costco warehouse Wednesday, May 21, 2025, in Lone Tree, Colo. (AP Photo/David Zalubowski)
Economists projected that consumer spending slowed in April and that inflation cooled to 2.2%.
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Overview

  • The Fed’s preferred inflation gauge, the personal consumption expenditures index, slowed to 2.1% in April from 2.3% in March.
  • Core PCE inflation, which strips out food and energy costs, remained at 2.5% year-over-year.
  • The Federal Reserve has kept its benchmark interest rate unchanged since January despite White House pressure for rate cuts.
  • A federal court ruled most of President Trump’s tariffs unlawful but left them in place during appeals, leaving their pricing impact uncertain.
  • Near-term inflation expectations are rising, with consumers and professional forecasters citing tariffs as a primary driver of anticipated price gains.