#USCorePCEMay Here are the latest headline figures for the U.S. Core PCE (Personal Consumption Expenditures) for May 2025—the Federal Reserve’s preferred inflation gauge:

Headline PCE rose 0.1% month-over-month, same as April, and 2.3% year-over-year, up from 2.2% .

Core PCE (excluding food & energy) increased 0.2% MoM (up from 0.1% in April) and 2.7% YoY (up from 2.6%) .

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📊 What this means

Inflation persistence: Core inflation has ticked up slightly, suggesting underlying price pressures remain elevated and still above the Fed’s 2% target.

Economic softening: Despite inflation holding steady, personal income fell by 0.4%, and consumer spending dropped 0.1% in May , prompting concerns about growth and the potential of a technical recession.

Fed outlook: These inflation readings likely justify the Fed's recent decision to keep interest rates steady at 4.25–4.50%, but also hint at possible rate cuts later in the year—though not before assessing inflation’s response to tariffs and economic cooling .

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🔍 Market & Fed reaction

Bond & equity markets: Treasury yields eased and stock futures held steady in response to the data .

Fed’s stance: Fed Chair Powell reiterated that rate cuts aren't imminent, citing tariff uncertainty and inflation risks .

Market expectations: Though one or two rate cuts may occur in 2025, the earliest is now likely only by September, not summer .

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🔮 Outlook

Core PCE is now 2.7% YoY, exceeding the Fed's long-term 2% objective.

The Fed is expected to maintain rates until it sees sustained inflation deceleration and clear signs of an economic downturn.

Key watchpoints: June inflation data, tariff developments, and consumer spending trends.

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