The Fed's Favorite Price Measure Is Coming Friday, And It's Likely To Influence Next Move In Inflation Chess Match

The SPDR S&P 500 SPY has been trending higher over the last week on the heels of the Federal Reserve's 0.25% rate hike, which very well could be its last in its current chess match with inflation. The central bank's preferred inflation measure will be released Friday and the data is likely to influence the Fed's next move.

PCE Preview: The Bureau of Economic Analysis is set to release Personal Consumption Expenditures (PCE) price index data for February at 8:30 a.m. ET Friday. 

PCE data is the Fed's preferred inflation measure. It's released monthly and shows changes in the prices of goods and services purchased by consumers in the U.S.

The headline PCE number is expected to come in at 5.3%, while core PCE inflation is expected to be 4.7%, according to Benzinga Pro.

Last month, the bureau reported a 5.4% increase in PCE for January. The data was up from 5.3% in December and came in above economist estimates of 4.9%. Core PCE was reported as up 4.7% in January, which was also higher than economists expected.

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Why It Matters: The market is currently projecting a 50% chance of a 0.25% increase at the Fed's next meeting and a 50% chance of a pause, per CME Group's FedWatch tool.

Given that PCE data is the Fed's preferred inflation guage, Friday's data is likely to tilt projections one way or the other.

The committee had been consistent in saying that "ongoing increases" were likely to be appropriate, but the central bank eased its stance at its last meeting, opting to say "some additional policy firming may be appropriate."

The Fed will also get a look at March CPI data on April 12 and PPI data the following day before the committee makes its next decision on rates May 3.

SPY Price Action: The SPY was up 0.44% at $403.13 at the time of writing, according to Benzinga Pro.

Photo: FelixMittermeier from Pixabay.