TechFlow news, May 30 — According to Jinshi Data, the U.S. will release tonight the personal consumption expenditures (PCE) price index—the inflation gauge most favored by the Federal Reserve. The market expects the April PCE price index to rise just 0.1% month-on-month, with the year-on-year rate declining from 2.3% to 2.2%, approaching pre-pandemic levels. On the core side, the core PCE, which excludes food and energy prices, is projected to grow 0.1% month-on-month, while its year-on-year increase is expected to remain elevated at 2.6%.
Currently, PCE is significant because the Fed prefers it for measuring the underlying trend of inflation.
Analysts point out that the inflationary impact of tariffs imposed by the Trump administration has only just begun permeating the U.S. economy. Even if Trump eases some tariffs, most economists predict inflation could still rebound to 3% in several months.
With U.S. core PCE stuck in the 2.8%-2.6% range for six consecutive months, the Fed's window for rate cuts is closing. Although some Fed officials remain positive about rate cuts, interest rate futures markets show traders have sharply reduced their odds of a September cut from 68% a week ago to 47%. They also anticipate that the U.S. economy stands at a crossroads of a new inflation cycle.
