US PCE nowcast – Slow progress in easing inflation in July
Inflation concerns persist as the Fed remains cautious amid stable labor markets and rising costs. Discover insights on the latest economic trends.
Inflation remains a pressing concern, with the PCE index showing only slight progress in July. Headline PCE inflation is expected to decrease marginally to 3.6%, while core PCE inflation holds steady at 3.3%.
Lower energy prices have exerted downward pressure, but their impact on the PCE index is limited compared to the CPI. Methodological changes in September are anticipated to reveal a more favourable inflation outlook, potentially revising core inflation down to 3% for July.
Despite these adjustments, persistent inflationary pressures—particularly from shelter costs and portfolio management fees—will keep the Federal Reserve cautious. The labour market remains stable, suggesting that significant rate hikes are unlikely until late 2027, when inflation may approach the Fed’s 2% target.
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