US Core PCE at 2.6 Percent in June
The US core PCE, which is the Fed’s preferred inflation measure, remained at 2.6 percent in June, higher than the 2.5 percent consensus. While the core PCE steadied, it was nonetheless the lowest tally since it jumped to 5.757 percent in February 2022. Meanwhile, the headline PCE slowed to 2.5% in June from 2.6% in May, in line with market forecast. With the core PCE continuing to slow below the 3% level since the start of the year, it is now highly likely that the Fed will start to cut its rate in September. In fact, the futures market is now pricing in a 100 percent likelihood of a 25 basis point cut in September. On top of that, there is also a 68.2 percent probability of an additional 25 bps cut in November and a 64.1 percent probability of another 25 bps cut in December.
Source: Trading Economics
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