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The Fed’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) price index, rose 0.3% from the prior month and 3.2% year over year in March 2026, matching Dow Jones forecasts and marking the highest reading since November 2023.
Including food and energy, the overall PCE increased 0.7% for the month and 3.5% from a year earlier.
The U.S. Commerce Department reported that GDP for Q1 grew at an annual rate of 2.0%. That was stronger than the 0.5% pace in Q4 2025, but below the 2.2% forecast. The report noted that the modest growth occurred even as spending on artificial intelligence surged.
Separately, the Labor Department said initial jobless claims fell to 189,000 for the week ending April 25, the lowest since September 1969, suggesting the labor market remains firm.
The inflation release came a day after the Fed decided to hold rates, with a 4-0 vote, reflecting internal differences over policy direction.
In what may be Chairman Jerome Powell’s final meeting, the Federal Open Market Committee (FOMC) voted to keep the target range at 3.5%-3.75%. The market had largely priced in no policy change, but the meeting featured growing dissent as more officials argued that rate cuts could come later. The FOMC split 8-4, with members citing different reasons for their votes. The last time four FOMC members dissented was October 1992.
In Powell’s post-meeting press conference, he said he would remain on the Board for an unspecified period until an investigation related to the renovation of the Fed headquarters is resolved transparently and decisively.
Brent Schutte, chief investment officer at Northwestern Mutual, said: “Powell ends his term with four dissents.” He added that the split is likely to persist as a new chair with a different policy orientation takes the helm, while the near-term outlook remains uncertain due to mixed signals from the labor market and growth with inflation above 3% since late 2023.
Inflation pressures mainly came from goods, which rose 1.4%, while energy increased 11.6%. Services prices rose 0.3%.
Higher energy costs have begun to weigh on consumption. Personal spending rose 1.6%, but spending on goods fell 0.1%. For March alone, spending rose 0.9%, largely due to gasoline prices exceeding $4 per gallon.
Government spending also rose 4.4%, with federal outlays up 9.3%, helping support quarterly growth.
In its statement following the meeting, the Fed emphasized: “Inflation remains elevated, partly reflecting the recent rise in global energy prices.”
Markets now expect the Fed to hold rates for the remainder of this year and into 2027. At the March meeting, policymakers projected one cut this year and another in 2027, bringing the federal funds rate to a neutral level around 3.1%.
Heather Long, chief economist at Navy Federal Credit Union, said: “This is a divided economy. AI-related sectors are booming, while middle- and lower-income households struggle with high gasoline prices and rising inflation.”
Premium gym chains are entering a “golden era” that is ending or already in decline, as rising operating costs collide with shifting consumer preferences toward more flexible, community-based ways to exercise. Long-term memberships are shrinking, margins are pressured by higher rents and facility expenses, and competition from smaller, more personalized…
