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July PCE: Fed's favored inflation gauge remained elevated
Fox Business • • business
Key Points:
- The Federal Reserve's preferred inflation gauge, the personal consumption expenditures (PCE) index, rose 0.2% in July and was up 3.7% year-over-year, slightly exceeding economists' expectations and remaining well above the Fed's 2% target.
- Core PCE, which excludes food and energy prices, increased 0.2% monthly and 3.3% annually, consistent with estimates, indicating persistent underlying inflation pressures.
- The personal savings rate rose to 3% in July from 2.6% in June, though it remains below earlier peaks, reflecting cautious consumer behavior amid ongoing inflation concerns.
- Economists warn that inflation remains a problem, with geopolitical tensions and trade issues potentially exacerbating price pressures, while some expect inflation to improve in coming months if conditions ease.
- The Federal Reserve is expected to hold interest rates steady at its September meeting, but market odds for a rate hike have increased slightly due to persistent inflation, which could impact equity markets if higher yields persist.
