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The Federal Reserve’s preferred gauge of inflation, Personal Consumption Expenditures (PCE), dropped to 2.1% in April, the lowest rate in more than four years.

The 2.1% annual inflation rate is close to the Fed’s target of 2.0% annual inflation and the lowest since February 2021 when the PCE inflation rate was 1.8%.

The rate is down from 2.3% in March and is better than the 2.2% rate that economists had predicted. The decline tracks with the April decline in the Consumer Price Index (CPI), which fell to 2.3% last month.

Core PCE, which excludes more volatile food and energy prices, dropped to 2.5% in April, down from 2.7% in March. It beat expectations of 2.6%.

For the month alone, the PCE index rose 0.1%, which was up from flat last month but in line with estimates. Core PCE also increased 0.1% in April, the same as March and on par with projections.

Will the Fed cut rates in June?

The Federal Open Market Committee (FOMC) meets on June 17-18 to decide whether or not to lower the federal funds rate, which is set at 4.25% to 4.50%.

On Thursday, Fed Chair Jerome Powell met with President Donald Trump to discuss “economic developments including for growth, employment, and inflation,” according to a statement from the Federal Reserve.

Trump has repeatedly pressed the FOMC to lower interest rates, including comments made earlier this week.

“It’s all coming down,” Trump said, reported the AP. “The only thing that hasn’t come down, but hasn’t gone up much, are interest rates. And we think the Fed should lower the rate. We think that it’s a perfect time to lower the rate. And we’d like to see our chairman be early or on time, as opposed to late. Late’s not good.”

But in statement released after Powell’s meeting with Trump Thursday, the Fed gave no indication that its approach had changed.

“Chair Powell did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook,” the Fed statement said. “Finally, Chair Powell said that he and his colleagues on the FOMC will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective, and non-political analysis.”

CME FedWatch survey, which polls interest rate traders, shows that rate cuts are not in the cards for June. Some 97.9% think rates will stay the same in June, while 75.6% say it will also stay the same in June. It isn’t until September that the majority, about 68%, expect a rate cut.

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