Odaily Planet Daily report: The U.S. PCE price index has been released, the Federal Reserve’s preferred inflation metric. The annual PCE inflation rate stood at 3.7%, unchanged from June. Core PCE inflation, excluding volatile food and energy categories, was also 3.3% year-over-year, matching June’s figure. Since the PCE data incorporates previously released inflation figures, it typically aligns closely with investor expectations. However, amid the Federal Reserve’s ongoing inflation concerns, this report further clarifies the inflation outlook, ahead of Fed Chair Powell’s major speech on Friday.
The U.S. CPI data for July brought good news: core CPI fell to a relatively moderate 2.5%. However, the PCE inflation rate assigns different weights to various spending categories, resulting in significantly stronger readings. There remains considerable uncertainty about how Walsh views the inflation challenge he inherited. He has not included his own economic forecasts in the quarterly “dot plot,” which aggregates Fed officials’ projections for economic and interest rate outlooks; nor has he indicated whether he might support rate hikes at upcoming meetings—a matter that has already caused divisions among Fed officials. (Jin10)