#USCorePCEMay Here’s a crisp, article-style breakdown of the US Core PCE for May 2025:
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🇺🇸 US Core PCE – May 2025 Report
Headline results
The PCE (Personal Consumption Expenditures) Price Index increased by 0.1% month-over-month in May, matching April's pace .
On a year-over-year basis, headline PCE rose 2.3%, up from 2.2% in April .
Core PCE (excluding food & energy)
Monthly core PCE rose 0.2%, slightly above expectations after a 0.1% gain in April .
Core inflation, annualized, reached 2.7%, compared to 2.6% in April—again a touch above forecasts .
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🔍 What It Means
Why Core PCE matters
The Federal Reserve’s preferred inflation gauge, the Core PCE is considered the best measure of persistent inflation by excluding volatile components like food and energy .
Fed policy outlook
Persistent readings above the 2% target mean the Fed is likely to delay cutting rates (currently at 4.25‑4.50%) until inflation clearly cools .
While some officials and political voices pushed for a July cut, this data implies the Fed is in a holding pattern, likely eyeing September or later for any easing .
Economic activity signals
Data showed a 0.4% drop in personal income and a 0.1% dip in consumer spending—the first spending decline since January, raising concerns about weakening demand .
This slowdown contrasts with stubborn inflation, creating a tricky scenario for policymakers weighing inflation risks against economic softness .
Market reaction
The S&P 500 and Nasdaq rallied to record highs, while Treasury yields eased as markets absorbed growth concerns .
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🌐 Broader Context
Tariff dynamics: Economists note that Core PCE pressures may reflect initial tariff pass-through, now beginning to show in price data .
Outlook: Markets currently price a ~75–80% likelihood that the Fed will hold in July, with rate cuts not expected until September or beyond .
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✅ Bottom Line
Inflation remains moderately above target—Core PCE at 2.7% vs. 2% goal.
With consumer spending softening, the Fed faces dual challenges: tame inflation or risk a blow to growth if they act prematurely.
Most likely: No rate cuts before fall, Fed waits for sustained cooling.
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