#USCorePCEMay

🇺🇸 U.S. Core PCE – May 2025 Report Overview

The Core PCE Price Index, the Federal Reserve's preferred inflation gauge, rose 0.1% month-over-month in May 2025, marking the smallest increase since late 2023. On a year-over-year basis, Core PCE increased by 2.6%, slightly below expectations and down from 2.8% in April.

This soft reading boosts optimism that inflation is gradually moving toward the Fed’s 2% target, potentially increasing the odds for interest rate cuts later this year.

🔍 Key Highlights

Monthly Increase: +0.1% (vs. +0.3% in April)

Annual Increase: +2.6% (lowest since March 2021)

Headline PCE Inflation: +2.5% YoY (including food and energy)

Consumer Spending: Flat in May after strong Q1 activity

Market Impact: Stocks edged higher; U.S. Treasury yields dipped

🏦 What It Means for the Fed

The cooler-than-expected Core PCE supports the argument for a dovish policy pivot. While the Fed remains cautious, this data adds to recent soft CPI and job market figures, possibly paving the way for a rate cut as early as September.

📈 Market Reaction

S&P 500: ↑ modestly

Dollar Index: ↓ slightly

Gold & Crypto: ↑ as rate cut expectations rise