US Core PCE Inflation Rises 2.9% in July
US core PCE index rises 2.9% YoY in July, matching forecasts and signaling persistent inflation pressure.
- Core PCE inflation rose to 2.9% YoY in July
- Monthly increase held steady at 0.3%
- Inflation data aligns with market expectations
Inflation Stays on Track with Fed’s Expectations
The US Core Personal Consumption Expenditures (PCE) price index — the Federal Reserve’s preferred inflation gauge — increased by 2.9% year-over-year in July. This rise was in line with analysts’ forecasts and marked a slight increase from June’s 2.8% figure. The month-over-month (MoM) rate held steady at 0.3%, again matching expectations.
This data signals that inflation, while cooling from its pandemic-era highs, still remains above the Fed’s 2% target. The PCE index excludes volatile food and energy prices, making it a more stable indicator of underlying inflation trends.
What This Means for the Fed and Markets
With both the YoY and MoM figures aligning with forecasts, the Federal Reserve may see little immediate pressure to shift its policy stance. The steady rise suggests the central bank’s current strategy of holding interest rates steady might continue, though any signs of renewed acceleration in the coming months could spark rate hike discussions again.
Markets generally reacted calmly to the report, as the data confirms that inflation is moving in a predictable direction. Investors continue to watch incoming economic reports closely, as the Fed remains data-dependent in its future decisions.
Looking Ahead: Will Inflation Keep Cooling?
While a 2.9% core inflation rate shows improvement from the highs of 2022, it still represents a stubbornly elevated figure. Policymakers will likely need to see several months of softer inflation before considering rate cuts. For now, stable numbers offer a cautious optimism that inflationary pressures are gradually easing without triggering a recession.
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