Portugal Colonial - US Fed's favored inflation measure cools further in June

The personal consumption expenditures (PCE) price index eased to an annual rate of 2.5 percent in June, the Commerce Department said in a statement, down slightly from 2.6 percent a month earlier.

This was in line with the median forecast of economists surveyed by Dow Jones Newswires and The Wall Street Journal.

While the June data is sure to be viewed as a positive development, inflation still remains stuck above the Fed's long-term target of two percent.

At the same time, the labor market appears to be moving into better balance between job seekers and job creators, and the economy remains in robust health, growing at an annualized rate of 2.8 percent in the second quarter of the year, according to data published earlier this week.

In recent weeks US central bank policymakers have been sounding more optimistic about the chances of an interest rate cut, even as they have continued to urge patience until the data supports such a move.

"We've said that you don't want to wait until inflation gets all the way down to two percent, because inflation has a certain momentum," Fed Chair Jerome Powell told lawmakers in Congress earlier this month.

"If you waited that long, you've probably waited too long," he added.

Stripping out volatile food and energy prices, the closely watched core measure of inflation eased to an annual rate of 2.6 percent in June -- also in line with expectations.

M.Carneiro--PC