#PCEInflationWatch

PCE Inflation Watch

The Personal Consumption Expenditures (PCE) Price Index is the primary inflation gauge used by the Federal Reserve to assess the state of consumer price increases in the U.S. economy. It's closely watched by economists, investors, and policymakers as a key indicator of inflationary pressures and the potential policy responses from the Federal Reserve.

The latest PCE data showed that inflation increased by 0.3% in December 2024, following an increase of 0.1% in November. This suggests that inflationary pressures remain persistent in the U.S. economy, despite the Fed's aggressive interest rate hikes throughout the year.

The core PCE price index, which excludes volatile food and energy prices, also increased by 0.3% in December, following an increase of 0.2% in November. This suggests that underlying inflationary pressures are also on the rise.

The recent PCE data is likely to keep the Federal Reserve on track to raise interest rates further in the coming months. The Fed has signaled that it is willing to accept some pain in the economy in order to bring inflation back down to its 2% target.

The PCE data is important for investors to watch because it can have a significant impact on asset prices. For example, if inflation continues to rise, the Fed is likely to raise interest rates more aggressively, which could lead to a decline in stock prices.

It is also important to note that the PCE data is just one indicator of inflation. Other important indicators include the Consumer Price Index (CPI) and the Producer Price Index (PPI).

Investors should monitor all of these indicators closely in order to get a complete picture of the state of inflation in the U.S. economy.