📊 US Core PCE – May 2025: Slight Upside, Fed Stays Cautious
The Bureau of Economic Analysis released the May 2025 Core Personal Consumption Expenditures (PCE) Price Index, a key inflation gauge for the Federal Reserve:
📈 Month-over-Month: +0.2% vs. +0.1% in April
📉 Year-over-Year Core PCE: +2.7% (up from 2.6% in April)
Headline PCE rose a modest 0.1% MoM, with annual inflation at **2.3%** .
---
⚖️ Why It Matters
The Core PCE is the Fed’s favorite inflation benchmark. That 2.7% annual rate now sits above the Fed’s 2% target . While the rise was expected, the persistent upside adds pressure to the timeline for interest rate cuts.
🧭 Market Reaction:
The S&P 500 and Nasdaq hit record highs
Treasury yields pulled back as consumer spending slowed
---
🔍 Key Takeaways
Inflation remains sticky: Core PCE's slight increase suggests inflation pressures persist
Fed unlikely to cut rates in July: Elevated core inflation makes near-term easing less probable
Economic growth cooling: Personal income fell 0.4%, spending declined 0.1%, hinting at a softer consumer backdrop
---
🧩 Strategic Perspective
For crypto investors and asset managers:
Inflation above target and cooling consumption support a cautious monetary outlook
This environment may favor non-yielding assets like Bitcoin, but expectations for economic slowdown could boost defensive plays
---
💬 Discussion prompt:
Will persistent inflation and slower consumer activity delay Fed rate cuts? How does this influence your crypto versus traditional investment positioning?
