BlockBeats report: On July 31, the U.S. PCE price index for June declined 0.1% month-over-month, marking the first monthly decrease in four years, with the year-over-year growth rate falling to 3.7%; core PCE rose 0.1% month-over-month and 3.3% year-over-year, both indicating easing inflationary pressures. During the same period, U.S. personal consumption expenditures in June increased 0.3% month-over-month, personal income rose 0.2%, and the savings rate dropped to 2.7%, hitting a four-year low.
Despite a cooling in inflation, the Federal Reserve held rates steady at its July meeting. Market expectations for future policy paths remain sharply divided: JPMorgan expects a 25-basis-point rate hike in December and considers a September hike still possible if inflation rises further; Goldman Sachs and Barclays anticipate no rate changes this year; Bank of America forecasts three cumulative rate hikes starting in September; while Citigroup maintains its expectation of consecutive rate cuts in October, December, and January 2027.
CME FedWatch data shows that the market is currently pricing in a 65.2% probability of a rate hike in September, a decline from before the interest rate decision was announced.