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Core Inflation Holds Steady at 3.3% as Fed Maintains Cautious Stance

The Federal Reserve's preferred inflation measure showed core inflation at 3.3% annually in April, matching economist expectations. This likely keeps rate-setting officials sidelined through the current pricing cycle. The personal consumption expenditures price index rose 0.4% monthly on a seasonally adjusted basis. First-quarter GDP growth disappointed markets, expanding at just 1.6% on an annualized basis after downward revisions to consumer spending and business investment. The weaker quarterly growth combined with persistent inflation suggests the economy is losing momentum heading into summer. Goods prices surged 0.7% in April, driven primarily by gasoline spikes, while services inflation excluding food, energy and housing remained modest. Market participants anticipate the Fed will hold rates steady through at least mid-year.