The US economy grew at a slower pace than initially estimated in the first quarter, while inflationary pressures remained elevated in April, reinforcing concerns that the Federal Reserve may have to keep interest rates higher for longer, Reuters reported.According to revised data released by the Commerce Department’s Bureau of Economic Analysis on Thursday, first-quarter gross domestic product expanded at an annualized pace of 1.6%, lower than the previously reported 2.0% growth rate. Economists surveyed by Reuters had expected the estimate to remain unchanged.The downward revision was largely driven by weaker consumer spending and lower inventory investment, signaling that parts of the economy may be losing momentum after a stronger finish to last year.At the same time, inflation continued to show persistence. The personal consumption expenditures (PCE) price index — the Federal Reserve’s preferred inflation gauge — rose 3.8% year-on-year in April, matching expectations of the economists polled. The reading marked the fastest annual increase since May 2023 and followed a 3.5% rise in March.On a monthly basis, the PCE price index increased 0.4% in April after climbing 0.7% in the previous month.Core PCE inflation, which excludes volatile food and energy prices, rose 3.3% from a year earlier, slightly above the 3.2% pace recorded in March. Monthly core inflation increased 0.2%, easing marginally from the previous month’s 0.3% gain.Financial markets reacted cautiously to the mixed economic data. U.S. stock indexes opened slightly lower, with investors balancing slower economic growth against persistent inflation concerns. Treasury yields remained broadly steady, while the U.S. dollar index edged lower.Analysts noted that the latest figures highlight the difficult environment facing the Federal Reserve. Slowing economic growth combined with elevated inflation has fueled concerns over stagflation risks, even as some investors believe softer core inflation readings could ease pressure on policymakers.Market participants are also continuing to monitor geopolitical developments and energy prices, which remain key drivers of inflation expectations and broader market sentiment.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)