BEA Methodology Shifts Lower PCE Inflation to 3.4%, but Energy Shocks Keep It Above Fed Target
The Bureau of Economic Analysis revised its PCE inflation methodology, lowering August’s core rate to 3.0% and overall rate to 3.4%, both below prior estimates. Despite these downward adjustments, inflation remains significantly above the Federal Reserve’s 2% target, driven by energy costs from the Iran conflict. The revisions ease pressure on the Fed to hike rates again before the midterms, though long-term bond yields have surged, signaling persistent inflation concerns.