BlockBeats report: On August 26, the U.S. PCE price index was released, the Federal Reserve’s preferred inflation gauge. The annual PCE inflation rate stood at 3.7%, unchanged from June. Excluding volatile food and energy categories, the core PCE inflation rate was 3.3%, also unchanged from June. Since the PCE report incorporates previously released inflation data, it typically aligns closely with investor expectations. However, amid ongoing concerns about inflation, this report further clarified the inflation landscape, just before Fed Chair Powell delivers a major speech on Friday. The U.S. CPI data for July brought good news: core CPI fell to a relatively moderate 2.5%. Yet, because the PCE inflation rate assigns different weights to various spending categories, its readings have consistently been notably higher.
There is still considerable uncertainty about how Walsh truly views the inflation challenge he has inherited. He has not included his own economic forecasts in the quarterly "dot plot," which aggregates Fed officials’ projections for the economy and interest rates, nor has he indicated whether he might support raising rates at upcoming meetings—a matter that has already caused divisions among Fed officials. (Jin10)