U.S. Federal Reserve reports rising PCE inflation, signals higher rates

The Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, rose 3.8% year‑over‑year in April 2026, the strongest increase since May 2023. Core PCE, which excludes food and energy, advanced 3.3% YoY, a level not seen since November 2023 and well above the Fed’s 2% target. The data, released by the Bureau of Economic Analysis on May 28, matched market expectations, so an immediate policy shift is unlikely, but the numbers reinforce policymakers’ view that inflation will stay elevated for longer.

Fed Chair Kevin Warsh’s committee signaled a more hawkish stance, projecting higher inflation through 2027‑28 and indicating that interest rates may remain higher for an extended period. The outlook pressures interest‑sensitive sectors such as real estate, utilities and growth‑oriented technology firms, while also reviving interest in assets like Bitcoin that are viewed as hedges against currency depreciation.