📊 August PCE Inflation: The Fed's Gauge Holds Steady
The latest data on the Federal Reserve's preferred inflation measure is in. Here's the key takeaway for August 2025:
· Headline PCE: Rose 0.3% for the month, pushing the annual rate to 2.7%, up from 2.6% in July.
· Core PCE (excludes food & energy): Rose 0.2% monthly, holding steady at 2.9% annually.
Both figures came in right in line with economist forecasts. While inflation remains above the Fed's 2% target, the fact that it didn't surprise to the upside offers some relief to markets.
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💡 What This Means for the Fed
· On Track for Cuts: This report is unlikely to alter the Fed's current path. Policymakers have already signaled openness to two more quarter-point rate cuts before the end of the year.
· The Real Story is Spending: The report also showed consumer spending jumped 0.6% in August, indicating a resilient economy despite higher prices. The key question is whether this strength will make the Fed more cautious about cutting rates too aggressively.