#USCorePCEMay
Here are the May 2025 Core PCE (Personal Consumption Expenditures) numbers for the U.S.:
Monthly Core PCE increase: +0.2%
Year-over‑year Core PCE: +2.7%
These figures slightly exceeded market expectations of +0.1% monthly and +2.6% annually .
📉 Why it matters:
The monthly +0.2% core inflation—higher than anticipated—signals that inflation remains stubborn, with potential upward pressure from tariffs yet to fully materialize .
The annual rate at 2.7% stays above the Federal Reserve’s 2% target, likely delaying imminent rate cuts.
Indeed, many economists now see Fed rate cuts pushed to September rather than July .
---
🏦 Market & Fed Response:
The S&P 500 and Nasdaq rallied to record levels, anticipating that despite persistent inflation, it won't deter planned cuts later this year .
The Fed’s “wait‑and‑see” stance continues, especially given uncertainties tied to recent tariffs and slowing consumer spending .
---
In summary: May’s Core PCE at +0.2% MoM and +2.7% YoY shows inflation not cooling as fast as hoped. This will likely keep the Fed cautious in the near term, with rate cuts now expected around September rather than July.
