Yesterday we noted stagnant price growth in Europe, but the environment in the US is hardly inflationary. The Federal Reserve’s favorite inflation metric, the core Personal Consumption Expenditure index (PCE), grew 1.2% Y/Y in March, in-line with expectations and slightly higher than February. Janet Yellen and company really need this index to turn higher as they continue to withdraw stimulus from the economy. The FOMC sounded optimistic about growth after yesterday’s meeting, where it cut monthly asset purchases to $45bn. If PCE indicators were to fall from current levels, it would be interesting to see whether the Fed would reverse course by increasing asset purchases or opt for a new strategy.