| Producer price index
The Fed received more impetus to raise rates with the February producer price index (PPI). According to the Bureau of Labor Statistics, the PPI “measures the average change over time in the selling prices received by domestic producers of goods and services."
"PPIs measure price change from the perspective of the seller," the government organization added.
The Fed uses the PPI for a different perspective on inflation from the personal consumption expenditures index (PCE). The PPI reflects the movement of price changes before they reach consumers, and it is viewed as an earlier predictor of inflation than the PCE.
Looking back to the last time the Fed raised rates in 2016, the mood was quite different. Treasury Secretary Janet Yellen, who was Fed chair at the time, said the following:
"So let me say that our decision to raise rates is—should certainly be understood as a reflection of the confidence we have in the progress the economy has made and our judgment that that progress will continue."
While markets are not saying “finally” today as they did in 2016, they do seem to be in good spirits. In morning trade, the Cboe Volatility Index was down almost 3%, the Dow Jones Industrial Average was in the green, and oil was trading below $100. However, gold was trading lower, as was bitcoin. | 