U.S. PCE inflation rises 0.3% in June as Fed holds rates steady

The U.S. economy added momentum to inflation concerns in June as the Personal Consumption Expenditures (PCE) index rose 0.3% from the prior month, surpassing expectations and marking a sharp contrast from the 0.1% growth recorded in May. The annual inflation rate also climbed to 2.6%, up from 2.3% in May, while core PCE—which excludes food and energy—hit 2.8% year-over-year, edging up from 2.7% [1]. This data reinforces the Federal Reserve’s current stance of maintaining its benchmark interest rate unchanged for a fifth consecutive meeting, with the rate range still set at 4.25% to 4.5% [1].

The inflation figures came amid a backdrop of continued fiscal policy uncertainty, particularly from the administration’s aggressive tariff strategy. Fed Chair Jerome Powell reiterated the central bank’s commitment to patience, stating it will “wait and see” how these trade policies impact the labor market and price stability [1]. This cautious approach is also influenced by the persistent inflation in services, which rose 3.5% year-over-year, a key challenge in the Fed’s effort to return to its 2% inflation target [1].

President Donald Trump responded to the data with renewed criticism of Powell, accusing him of being “TOO LATE, TOO STUPID, & TOo POLITICAL” and claiming the Fed is costing the U.S. “TRILLIONS OF DOLLARS.” The attacks, which have become a frequent feature in Trump’s public commentary, highlight the political pressure on monetary policy as inflationary pressures show no immediate sign of abating [1].

Meanwhile, wage growth remained subdued, with salaries and wages rising just 0.1% in June—the slowest pace since November 2024 [1]. Combined with a stagnant personal savings rate of 4.5%, the data points to a labor market that is not yet strong enough to offset the rising cost of services and goods [1]. The weak wage growth raises concerns that households are struggling to keep up with inflation, particularly in the services sector, which has proven resistant to cooling.

Market reactions reflected this uncertainty, with gold prices surging as investors sought safer assets. Spot gold climbed 1% to $3,308.07 per ounce, and U.S. gold futures rose 0.3% to $3,306.10, signaling heightened risk perceptions amid the inflationary backdrop and the looming August 1 deadline for closing trade negotiations [1].

Overall, the Fed’s “wait and see” strategy remains intact, but the recent inflation data complicates the case for near-term rate cuts. With Trump’s tariff-driven uncertainty and the stickiness of service prices, policymakers appear to be bracing for a longer period of inflationary pressure before considering any policy easing.

Source: [1] PCE inflation rose 0.3% in June, with the annual rate hitting 2.6% (https://coinmarketcap.com/community/articles/688b8160e798744f91d5f9d3/)