Powell Cautions Against Overinterpreting CPI Data

According to Odaily, U.S. Federal Reserve Chairman Jerome Powell cautioned against overinterpreting the recent Consumer Price Index (CPI) data, which showed the largest month-on-month increase in over a year. Speaking at a House Financial Services Committee hearing on Wednesday, Powell acknowledged that the CPI figures were significantly higher than anticipated. He emphasized, "The CPI reading exceeded nearly all forecasts, but I want to remind you of two points. First, we do not get excited over one or two good readings, nor do we get concerned over one or two bad readings. Second, our inflation target focuses on the Personal Consumption Expenditures (PCE) Price Index, as we consider it a better measure of inflation. Therefore, understanding the conversion from CPI to PCE is essential. Tomorrow, we will gain more insights from the Producer Price Index (PPI), and later in the day, we will learn about the PCE reading."