Key Takeaways Inflation cooled in January, according to Personal Consumption Expenditures, the Federal Reserve's preferred measure of inflation.Inflation rose 2.5% over the year in January compared to 2.

Thomas Ryan, an economist at Capital Economics, attributed the decline in part to “unseasonably severe winter weather,” but warned that the Fed’s job will become “trickier if January’s sharp decline in consumption was a sign of consumer strength buckling.”

The decline in the personal consumption expenditures index from 2.6% the month before was in line with expectations.

The Federal Reserve’s preferred inflation gauge cooled as expected in January; however, the good news came with a red flag for the US economic engine: Consumers pulled back their spending by the most in nearly four years.

The central bank wants to see further progress that price pressures are easing before it lowers interest rates again.

Traders of futures contracts that settle to the Federal Reserve's policy rate maintained bets on Friday that the U.S. central bank will restart cuts to short-term borrowing rates in June after data showed inflation rose in line with expectations in January.

Inflation in the Federal Reserve’s preferred price gauge eased in January after making steady increases throughout the fall. The personal consumption expenditures (PCE) price index increased by

Inflation pressures continued to moderate in January, which may give the Federal Reserve reason to lower interest rates again later this year. The personal consumption expenditures, or PCE, price index,

The Federal Reserve could restart cuts to short-term borrowing rates in June and follow up with another reduction in September, traders bet on Friday, after data showed inflation edged down in January in line with expectations.