U.S. PCE Inflation Steady at 2.3% in March; Rate Cut Hopes Fade

Personal Consumption Expenditures (PCE) inflation rose 2.3% year-over-year in March, in line with forecasts, with no change month-over-month, according to the U.S. Bureau of Economic Analysis.

Core PCE inflation—the Fed’s preferred metric—eased to 2.6% YoY, its lowest level since June 2024. While this signals a possible cooling of inflation, expectations for a May rate cut have sharply declined.

Even as JOLTS data revealed job openings at a four-year low—typically a dovish signal—the Fed remains cautious. Chair Jerome Powell and the FOMC appear focused on potential inflation risks tied to proposed Trump-era tariffs, adding to skepticism over imminent policy easing.

Markets are responding accordingly: the CME FedWatch Tool shows a 92.2% probability the Fed will hold rates steady at its May 6–7 meeting, a view mirrored by Polymarket, where odds of no change stand at 93%.