#USCorePCEMay

Here are the official U.S. Core PCE (Personal Consumption Expenditures) inflation figures for May 2025, along with context and what it may signal for the U.S. economy and markets:

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🔍 May 2025 Key Inflation Data

• Headline PCE (overall inflation): +0.1% month-over-month, +2.3% year-over-year  

• Core PCE (ex-food & energy): +0.2% MoM, +2.7% YoY 

This indicates a slight acceleration—core PCE rose from +2.6% to +2.7% YoY, a bit hotter than expected ().

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📈 Why Core PCE Matters

• It’s the Federal Reserve’s preferred inflation gauge, and it’s crucial in shaping monetary policy .

• At +2.7% YoY, core PCE remains above the Fed’s 2% target, suggesting inflationary pressure persists.

• For the third consecutive month, consumer spending and incomes declined, signaling potential economic weakening even as prices remain elevated  .

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🏦 What This Means for the Fed & Markets

• Rate cuts delayed or softened?

A hotter-than-expected core PCE may push back on July rate cut speculation. Markets had been pricing in cuts starting September, but the Fed may take a more cautious stance  .

• Growth concerns on the rise

Falling consumer income and spending underscore broader economic softening, which may balance inflation pressure—but it’s still a mixed signal .

• Market reaction

Stock indices hit record highs post-release, while Treasury yields pared gains—indicating investors see this data as “balanced,” not alarming .$TRUMP