The Federal Open Market Committee considers 2 percent the ideal inflation mark, because it's typically a key indicator of strong economic health.
Inflation is finally moving closer to the Fed's targeted 2%, with consumer prices accelerating in the year through March, although this is not expected to change the Fed's plan to gradually increase interest rates.
The rise in the annual inflation measures reported by the Commerce Department on Monday were anticipated by economists and Fed officials and is not expected to alter the USA central bank's gradual interest rate hikes.
Other data last week showed that while US economic growth slowed to an annualized rate of 2.3 percent in the first quarter, wages and salaries shot up 0.9 percent during the same period.
The price gauge linked to consumption rose 2% from a year earlier after 1.7% in February; excluding food and energy, which officials see as a better gauge of underlying trends, it was up 1.9%. That was the biggest gain since February 2017 and followed a 1.7 percent rise in February, the Commerce Department said on Monday.
Remains below the Fed's target of 2.0%.
The Fed is not expected to make any changes to United States monetary policy, but investors will be keeping a close eye on potential shifts in stance from Fed officials. Many Fed speakers acknowledge a possible coming overshoot on inflation, but that won't derail the expected gradual rate hikes over the next two years.
The Fed meets again this week, on Tuesday and Wednesday. But the rise of the 10-year yield to a record high hasn't done much for bank stocks, because short-term rates have climbed even more.
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Inflation is also likely to be fanned by an anticipated pickup in economic growth, driven by a $1.5 trillion tax cut package and increased government spending.
Consumer spending on whole rose 0.4 percent in March after decreasing 0.2 percent in February. The data was included in last Friday´s advance first-quarter gross domestic product report.
First-quarter GDP grew at a 2.3% annualized rate, GDP data showed April 27, faster than the forecast for a reading of 2% but weaker than the 2.9% in the fourth quarter.
The so-called real consumer spending fell 0.2 percent in February. Personal income increased 0.3 percent in the month, the same growth in the previous month.
Wages gained 0.2 percent in March after rising 0.4 percent in the prior month.
Rising incomes are helping Americans to afford their purchases, but they did into their savings a bit in March.
"The 10-year yield could be able to build a more permanent foothold above 3 percent depending on Friday's U.S.jobs report".