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1h ago

PCE Inflation Edges to 2.7% as Core Holds at 2.9% in August, Keeping Fed Cut Path in Play

The in-line reading preserves hopes for additional easing this year.

FILE PHOTO: General view of the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., December 30, 2016. REUTERS/Stephen Yang/File Photo
People shop for groceries at a store in New York City, U.S., July 15, 2025. REUTERS/Jeenah Moon

Overview

  • Headline PCE rose 0.3% on the month and 2.7% year over year in August, while core PCE increased 0.2% monthly and stayed at 2.9% annually, matching forecasts.
  • U.S. stock futures ticked higher and Treasury yields eased after the report, reflecting a modest market response to the steady inflation trend.
  • Consumer spending climbed 0.6% in August and personal income rose 0.4%, reinforcing a growth backdrop that included a stronger 3.8% annualized Q2 GDP revision.
  • The Federal Reserve cut rates by 25 basis points on Sept. 17 to 4.00%–4.25%, and investors are weighing the odds of one or two additional reductions later this year.
  • New U.S. tariffs pose upside risks to prices, with Fed officials, including Chair Jerome Powell, suggesting the effects may be a one-time level shift even as pass-through could build.