PCE Market Watch – May 2025
The Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation gauge, showed a slight uptick in April, rising 0.3% month-over-month and 2.7% annually. Core PCE, excluding food and energy, increased 0.2%, signaling persistent inflationary pressure. Markets reacted cautiously, with Treasury yields edging higher and the S&P 500 closing slightly down. Investors now anticipate the Fed may delay rate cuts, awaiting clearer signs of inflation easing. Consumer spending growth also slowed, reflecting tightening financial conditions. As the PCE remains above the Fed's 2% target, the central bank’s next policy move remains highly data-dependent.