Economic Report: Inflation hits Fed’s 2% target, PCE shows, in prelude to faster rise in U.S. interest rates

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Americans increased spending in March for the first time since the end of 2017, but rising inflation could be a problem.

The numbers: A key inflation gauge rose to 12-month rate of 2%, hitting the Federal Reserve’s target for the first time in a year and potentially signaling a faster increase in U.S. interest rates.

The PCE index, the Fed’s preferred inflation barometer, rose to 2% year over year from a 1.7% pace in February.

The 12-month increase in the more closely followed core rate of inflation was close behind, rising to 1.9% in March from 1.6% in the prior month.

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