Overview

• July PCE held at 2.6% year over year with a 0.2% monthly gain, while core PCE rose to 2.9% and 0.3% month over month, the highest annual core reading since February.
• Consumer spending increased 0.5% in July and personal income rose 0.4%, pointing to steady demand even as price pressures persist.
• Fed funds futures put the probability of a 25‑basis‑point cut on Sept. 16–17 near 87% after the report, reinforcing expectations for the first easing since December 2024.
• Fed Governor Christopher Waller urged a quarter‑point cut in September and said additional reductions over the next three to six months would depend on incoming data.
• Fed governance faces strain as Governor Lisa Cook sued to block her removal by President Trump, with a Friday court hearing that could determine whether she participates in the September meeting.