The February personal consumption expenditures (PCE) report is out and core inflation was higher than expected at 2.8% year-over-year. While that’s above the 2.7% experts were expecting, it lines up with what Federal Reserve Chairman Jerome Powell expected in his statements earlier this month. Core PCE also jumped 0.4% from January to February, also above a 0.3% estimate.
Overall inflation was 2.5% year-over-year, which matched experts’ expectations. On a month-to-month basis, overall PCE increased by 0.3%. As with the year-over-year performance, month-to-month inflation matched predictions.
What This Means for the Economy
Inflation being slightly above estimates likely has some experts worried, especially as President Donald Trump’s trade war hasn’t largely affected prices yet. That’s expected to change after April 2, which the President has named “Liberation Day.” This is when Trump intends to introduce a new set of tariffs, further escalating the trade war.
Inflation has been a key concern of the Federal Reserve as it seeks to drop it back to 2%. However, tariffs and other economic factors could keep it above that level for the foreseeable future. That means investors might have to deal with increased interest rates for longer as the central bank keeps them elevated to combat inflation.
How Investors Are Reacting to Tariffs
Investors are fleeing to safe-haven investments as the trade war intensifies. That includes buying government bonds, hoarding gold, and seeking out other assets. This has reignited interest in gold stocks, including the mining companies that seek out the precious metal.
With interest in gold increasing, investors may want to consider stakes in gold mining companies. Barrick Gold (GOLD), Kinross Gold (KGC), Wheaton Precious Metals (WPM), and Rio Tinto (RIO) are worth highlighting with their analysts’ consensus Strong Buy ratings. RIO offers the highest upside potential at 23.58%, with GOLD close behind at 18.14%.
