While the consumer price index is more well known, the PCE is used by the Fed in its forecasts. For now, the central bank is on pause as it holds interest rates steady while awaiting further economic data and sees the effects of President Donald Trump ’s proposed tariffs on imported goods.

Surveys showing a rise in consumer inflation expectations mean the central bank needs to keep its focus on ensuring price pressures are contained.

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.