Wells Fargo: PCE Deflator Set To Approach 3%

The core PCE inflation print for March released earlier today came in line with expectations at +1.8% Y/Y. Headline also was as expected at +2.3% - while that's above the Fed's 2.0% 'target', we are in, as they continue to remind us, a "transitory" period of elevated base effects, so will be a few months at least before 2+% readings have any real bearing.

• Wells Fargo saw the bump higher in PCE inflation as expected, but notes: "it's too soon to know if current price pressure is the effects of the reopening that may soon subside or will in fact lead to sustained higher price growth past the sharp bounce in activity....Our own forecast has the PCE deflator approaching 3% on a year-over-year basis mid-year before settling lower...we expect the Fed to remain in wait-and-see mode for months to come and keep policy accommodative."