Investing.com - As the Federal Reserve anticipates the release of their preferred inflation measure, economists predict that prices continued to rise in April. The personal consumption expenditures (PCE) price index is scheduled for release on Friday morning and is likely to show a monthly increase of 0.3%, with an annual increase from March's 4.2% rate to 4.3%. This would provide no comfort for Fed officials who have noted that current inflation rates are "too high" and progress towards reducing it has been "unacceptably slow."
Economists also forecast a steady annual core PCE rate at 4.6% year-over-year, excluding food and energy sectors which tend to be more volatile.
Uncertainty remains among committee members about how much policy tightening may be needed, considering financial instability and slower economic growth factors alongside efforts to control inflation.
The US gross domestic product (GDP) growth rate showed improvement during Q1, revised upward by the Bureau of Economic Analysis from initial estimates of a 1.1% increase up to an actual annual rate of 1.3%. However, this still falls short compared to ideal GDP growth rates between two and three percent.
Higher interest rates have started impacting certain industries such as housing due to increased mortgage costs while corporate profits decline; however, consumer spending gains remain supported by a strong labor market.
While both headline and core PCE are expected not deviate significantly in upcoming reports, experts will keep an eye on "supercore" data – subtracting housing rents from core PCE figures – which only grew by approximately .24% month-over-month back in March.
In anticipation of Friday's report playing a crucial role in shaping future policies and rate hikes, ING's chief international economist James Knightley predicts that officials will forgo an interest-rate hike at the June Federal Open Market Committee meeting. However, any decisions regarding inflation and rates will ultimately depend on incoming data.