Fed’s Preferred Inflation Gauge Up 6.4% in February to Four-Decade High

The Federal Reserve’s preferred inflation gauge, the personal consumption expenditures price index (PCE), showed annual inflation rose 6.4% in February, the Commerce Department's Bureau of Economic Analysis reported Thursday.

The inflation rate accelerated from the 6% clip reported a month ago. The February pace was the highest since 1982.

Some crypto traders watch inflation readings closely because the bitcoin (BTC) market sometimes moves after economic indicators are released. Some investors hold bitcoin as a protection against inflation. The cryptocurrency was little changed after the report was published, changing hands at around $47,500 at press time.

The report also showed that consumer spending slowed to 0.2%, from 2.7% in January.

While the consumer price index (CPI) is regarded as the most widely watched inflation tracker, the Fed prefers to look at the PCE report, which reflects the prices that people spend for certain goods and services and how their spending behavior changes when prices rise.

The U.S. central bank says that the PCE offers a better representation of inflation, partly because it encompasses a broader range of costs.

Inflation remains high as the war in Ukraine is causing natural gas prices to skyrocket and as supply chain issues are bringing food prices to new highs.

On Friday, the Bureau of Labor Statistics will release its monthly jobs report. According to Dow Jones, economists expect 460,000 jobs were added in March and an unemployment rate of 3.7%, down from 3.8% in February.

With the Fed’s dual mandate to promote employment and keep prices stable, if the jobs report shows a tighter-than-expected labor market, the Fed may be more aggressive in raising interest rates.