February 28, 2022 — US PCE Up 5.2 Percent in January


The Fed looks at the PCE (core personal consumption expenditures) index as their primary inflation index.  It rose 5.2 percent from a year ago, the highest level since 1983. If you include food and energy, the PCE is up 6.1 percent, the strongest gain since 1982. The Commerce Department also showed Friday that consumer spending accelerated, faster than expected in January, by 2.1 percent. With this new data, the economy seems to be in good shape, opening the door for rate hikes.

The Federal Reserve will be raising interest rates, most likely in two weeks, to cool inflation which is currently running at a 7.5 percent annual rate. The Russian invasion of Ukraine will affect energy prices and likely put a damper on consumer sentiment, so it is expected rates will go up only by 0.25 percent rather than the 0.5 percent as has been speculated.

In this risky environment, you can mitigate some of the uncertainty.  Interest rate hedges will allow you to lock in the low rates available today and better plan out your future interest rate obligations if you act soon.