BlockBeats news: On September 30, the U.S. August PCE price index will be released at 20:30 tonight. Markets expect August PCE inflation to remain elevated, and the data may fail to provide sufficient grounds for the Fed to pause further policy tightening.
Overall PCE increased 0.4% month-over-month and 3.7% year-over-year, both roughly in line with July figures; core PCE, excluding food and energy, is expected to rise 0.3% month-over-month and 3.3% year-over-year, still above the Federal Reserve’s 2% inflation target.
The rebound in energy prices and resilient consumption may complicate the Fed’s policy assessment. If data align with expectations, markets may continue to focus on whether the Fed will raise rates again this year. At its September meeting, the Fed raised the policy rate by 25 basis points to a range of 3.75%-4.00% and signaled in its latest projections that further adjustments remain possible before year-end.
There is disagreement within the Federal Reserve regarding the future policy path. Fed Governor Barr believes that tariffs and the conflict in Iran have diverted inflation from its path back toward the 2% target, suggesting that further rate hikes may still be necessary. In contrast, New York Fed President Williams stated there is no need to act hastily but expects one more rate hike this year. If PCE inflation comes in higher than expected, market pricing for additional rate hikes could strengthen.