Core PCE Inflation Runs a Touch Hot, Dimming Hopes for September Rate Cut
The Federal Reserve’s key inflation gauge ran just slightly above expectations in June, raising additional doubts about how quickly the bank will be able to lower interest rates.
The core personal consumption expenditures price index, which strips out the cost of food and energy, rose 0.3% on the month and 2.8% from a year earlier, the Bureau of Economic Analysis said Thursday. That topped FactSet estimates for a 0.29% monthly and 2.7% annual gain.
Headline PCE rose 0.3% on the month and 2.6% from a year earlier, leaving the annual metric at its highest level since February. Consensus estimates were for respective rates of 0.23% and 2.5%.
The stronger-than-expected result complicates the Fed’s path to rate cuts. When officials held interest rates steady this week, they said they wanted to see more evidence that inflation is sustainably moving toward the bank’s 2% target. This report could delay that.
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