U.S. inflation accelerates sharply in second quarter

U.S. inflation accelerates sharply in second quarter

 Inflation as measured by the Federal Reserve's preferred price index surged in the second quarter to the highest annual rate in three years, potentially making the central's bank effort at managing the U.S. recovery more difficult. The PCE index rose at a 2.3% annual rate in the April-to-June period, compared to 1.4% in the first quarter. That's the fastest pace since the second quarter of 2011. And the core PCE that excludes food and energy climbed at a 2% clip, up from 1.2%. The Federal Reserve believes the pickup in inflation has been exaggerated by temporary factors that should ease soon, but if the central bank is wrong, it could be forced to raise interest rates sooner than it would like. The Fed would like to see inflation in an annual range of 2% to 2.5% - anything much higher or lower is viewed by most top bank officials as harmful to the economy in the long run. Top Fed officials were scheduled to meet Wednesday morning to plot their next move. The central bank is winding down a massive stimulus program on the expectation that growth will continue to improve.