All articles tagged with #core pce
Motley Fool argues that the Trump-era Iran conflict is driving inflation beyond energy, with core PCE staying sticky due to shipping-route shifts, fertilizer and helium shortages, and other supply-chain disruptions, potentially prompting higher interest rates and threatening the stock market rally.
March 2026 core PCE rose 0.3% month-over-month (3.2% year-over-year), with total inflation up 0.7% and 3.5% year-over-year when including energy and food. GDP grew 2.0% annualized in Q1 2026, while unemployment claims fell to 189,000. The Fed kept rates unchanged amid persistent inflation, with four dissents over policy phrasing, as energy costs and goods price pressures remained a key driver of inflation.
Senate testimony shows Kevin Warsh backing a trimmed-mean inflation measure to capture underlying inflation, excluding one-off shocks. Bank of America cautions that switching to this gauge could let energy and food shocks matter more, possibly raising the reading and pushing the Fed toward a hawkish stance. If trimmed inflation outpaces core PCE in the future, Warsh may have to defend his approach to preserve credibility, even as critics argue the move aligns with Trump interests.
The Fed’s preferred inflation gauge rose 0.4% for a third straight month (core also +0.4%), lifting the year-over-year PCE to 2.8% and core PCE to 3.0%—still well above the Fed’s 2% target. Analysts expect near-term oil-price spikes linked to the Iran conflict to push prices higher and delay rate cuts, with the market reacting to higher rates and a softer economy if the conflict persists.
U.S. inflation accelerated in December as the Commerce Department’s PCE price index rose 0.4% for the month and 2.9% from a year earlier, the fastest yearly rise since March 2024. Core PCE also climbed 0.4% MoM and 3.0% YoY. Yet spending rose 0.4% and while gas prices fell, electricity and natural gas costs rose. The Federal Reserve left rates around 3.6%, with officials wanting inflation closer to 2% before considering rate cuts.
The Core PCE data, a key measure of US inflation, is due on Friday, May 31, 2024, with expected ranges of 2.7%-2.8% y/y and 0.2%-0.3% m/m. Data falling outside these ranges can significantly impact markets due to surprise factors, psychological effects, risk reassessment, automated trading triggers, and potential changes in monetary and fiscal policies.
The March Consumer Price Index (CPI) is expected to show elevated inflation of 3.4%, driven by higher energy costs, with core inflation at 3.7%. Despite this, some economists anticipate a slowdown in core inflation throughout the year. The Federal Reserve is debating whether to cut rates, with market expectations shifting from six cuts to just two and a half this year, as strong labor data complicates the decision-making process.
In February, US core PCE inflation rose by 2.8% year-on-year, meeting expectations, while personal income increased by 0.3% and personal spending surged by 0.8%. The dollar softened despite a lower-than-expected headline monthly inflation reading. Goods prices fell by 0.2% year-on-year, while services prices rose by 3.8% year-on-year, indicating a mixed inflation trend.
The US dollar's near-term trajectory and the FOMC’s guidance may be influenced by the release of core personal consumption expenditures data, the Fed’s preferred inflation gauge. A subdued core PCE reading below 3.0% could lead to a sharp turn to the downside for the greenback, potentially validating market pricing of deep interest rate cuts. Meanwhile, EUR/USD is facing potential pullback towards 1.0770, GBP/USD is consolidating within a symmetrical triangle, and gold is confined between $2,030 and $2,005 with potential breakout levels at $2,065 and $1,990.
The core personal consumption expenditures (PCE) price index, a key inflation gauge used by the Federal Reserve, rose 0.1% in November and increased 3.2% from a year ago, slightly below economists' expectations. On a six-month basis, core PCE increased 1.9%, indicating that the Fed is nearing its inflation target. Consumer expenditures and income also rose in line with expectations, suggesting continued spending despite ongoing inflation pressures. The Fed prefers PCE as an inflation measure and has indicated it is done raising rates, with expectations of rate cuts in 2024.
The technical outlook for gold is positive as the market awaits the release of the US Core PCE Price Index, which is expected to show a slight decrease in November. If the data aligns with market forecasts, the Federal Reserve will face challenges in justifying the need to maintain current interest rates. Gold is currently testing resistance levels and finding support at the 20-day simple moving average. A break above resistance could lead to further gains, while a break below support may leave the precious metal vulnerable. Retail trader data suggests a bearish sentiment, but the contrarian view takes into account the possibility of gold prices continuing to fall.
Analysts at 22V Research have outlined a playbook for how the stock market will react to different inflation scenarios. They predict that if inflation remains above 2.4% but below 2.75%, the Fed may still cut rates, favoring deeper cyclicals and making it tough to short the U.S. dollar or bet on U.S. Treasury yields declining. If core inflation tracks above 3%, Treasury yields and the U.S. dollar would move higher, benefiting risk-off factors. Alternatively, if inflation falls below 2.4% without an increase in the unemployment rate, stocks are expected to perform well. The analysts also suggest that lagging companies, such as small caps, should continue to catch up.
The Federal Reserve has lowered its inflation forecast, expecting the core personal consumption expenditures (PCE) price index to fall to 2.4% in 2024. The central bank also upgraded its forecast for gross domestic product (GDP) growth in 2023 to 2.6%. Projections for the unemployment rate remained largely unchanged. The Fed's dot plot showed a median expectation of three quarter-point rate reductions by the end of 2024, bringing the targeted range to 4.6%.
Inflation in the US accelerated in September, with the core personal consumption expenditures price index rising 0.3%, in line with expectations. However, consumer spending exceeded forecasts, increasing by 0.7%. Personal income also rose by 0.3%, slightly below estimates. The Federal Reserve focuses on core inflation, which has been on a downward trend but remains above the central bank's 2% target. The report is unlikely to change the Fed's view that inflation will slow in the coming months as demand moderates. Traders are pricing in a near-100% chance that the Fed will not announce a rate hike at its upcoming policy meeting.
The Federal Reserve's preferred inflation measure, the Personal Consumption Expenditures (PCE) Index, grew at its slowest pace since September 2021 in August, with a year-over-year increase of 3.5%. The "core" PCE, which excludes food and energy categories, grew 3.9% year over year. These figures align with the Fed's efforts to tame inflation, as Chairman Jerome Powell noted that inflation remains above the target of 2%. The Fed expects core PCE to peak at 3.7% this year before cooling to 2.6% next year and 2.3% in 2025. The Fed is closely monitoring economic developments that could impact inflation's trajectory.