Today, the Federal Reserve’s preferred gauge of consumer prices showed core Personal Consumption Expenditures held near recent levels, a result that keeps markets focused on the timing of further rate cuts. The reading follows the Fed’s first easing move last week and comes amid a string of mixed macro reports that have left policymakers debating how fast to ease policy — see the core PCE price level.
The Bureau of Economic Analysis report showed the headline PCE rose 0.3% in August and 2.7% year-over-year, while core PCE (excluding food and energy) was unchanged at an annualized 2.9% after a 0.2% monthly gain.
Personal income and spending were a touch firmer than economists expected: personal income rose 0.4% and personal consumption expenditures accelerated at a 0.6% monthly pace, signaling consumers are still buying despite higher prices and tariff uncertainty.
Why it matters: the stickiness of core inflation at 2.9% complicates the Fed’s calculus. Policymakers have signalled further cuts this year, but persistent services and shelter pressures mean officials can’t assume a smooth path to the Fed’s 2% target — markets will be watching how quickly the Fed trims its rate forecasts and whether incoming data loosens the timeline for cuts (CME FedWatch odds remain a live market input).
