Inflation slowed in April, a development that may lead to falling borrowing costs.
The Federal Reserve’s preferred inflation measure for April came in line with expectations, the Commerce Department showed on Friday, in what could be a signal that price increases are slowing, which could lead policymakers to slash borrowing costs.
The Personal Consumption Expenditures (PCE) price index accelerated on a monthly basis by 0.3 percent in April—the same as March—matching estimates by economists. On an annual basis, PCE inflation increased 2.7 percent, equaling the level from a year ago, government data showed.
The trajectory of inflation is key to determining the cost of loans, including for mortgages. The Federal Reserve hiked rates to a more than two-decade high to slow soaring inflation. The move helped to push up borrowing costs, including for mortgages. Any indication that inflation is slowing could contribute to a drop in rates.
The 10-year Treasury yield, which is the interest that the government pays when borrowing money and tends to track with how mortgage rates evolve, fell slightly after the PCE data came out.
