US Core PCE Price Index YoY Actual 2.9% (Forecast 2.9%, Previous 2.8%)

US Core PCE Price Index YoY Actual 2.9% (Forecast 2.9%, Previous 2.8%)

The Personal Consumption Expenditures (PCE) Price Index, a key measure of inflation, is forecast to rise 0.3% month-over-month (MoM) and 2.9% year-over-year (YoY) in July. The core PCE, which excludes volatile food and energy prices, is expected to advance 0.3% MoM, the same pace as in June. Over the last twelve months, core PCE inflation is set to tick up to 2.9% from 2.8% in June. Meanwhile, the headline annual PCE inflation is seen holding steady at 2.6% [1].

Markets broadly expect the Federal Reserve to cut the policy rate by 25 bps in September. The United States Bureau of Economic Analysis (BEA) will publish the PCE data for July on Friday at 12:30 GMT. The PCE index is closely watched by market participants as it is the Federal Reserve’s preferred measure of inflation and could influence the policy outlook.

The core PCE Price Index is expected to accelerate in July to 0.30% MoM, while headline inflation is forecast to moderate to 0.22% due to weak food and energy inflation. TD Securities expects personal spending to increase 0.5% as core retail sales were strong [1].

The USD maintains a neutral stance after weakening against its rivals in the immediate reaction to Powell’s remarks. The monthly core PCE figure will hold utmost relevance, but the market reaction could remain short-lived. A reading of 0.5% or higher could trigger a USD rally and weigh on EUR/USD, while a print of 0.2% or lower could have the opposite impact on the pair’s action [1].

References:
[1] https://www.fxstreet.com/news/us-core-pce-inflation-set-to-rise-29-yoy-in-july-amid-rising-bets-of-fed-rate-cut-in-september-202508290600