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The upcoming release of the Personal Consumption Expenditures (PCE) Price Index data for May is expected to provide valuable insights into inflationary pressures and influence market expectations about the Federal Reserve’s interest rate policy.
According to forecasts, the core PCE Price Index—considered the Fed’s preferred measure of inflation—will increase by 0.1% month-on-month (MoM) and 2.6% year-on-year (YoY) in May. Meanwhile, the headline PCE inflation rate is anticipated to rise to 2.3% on an annual basis for the reported month.
The PCE Price Index data is due for release by the U.S. Bureau of Economic Analysis (BEA) on Friday at 12:30 GMT. Given its significance, the index will be closely monitored by traders and economists who are seeking further clarity on when the Federal Reserve may begin to reduce interest rates after holding them steady for the time being.
At present, markets broadly expect the Federal Reserve to stand pat on interest rates during its next policy meeting in July. However, the ongoing inflation data, particularly the PCE Price Index, is expected to guide the central bank’s decision-making process on whether to take action later in the year. With inflation showing signs of moderation but still remaining above the Fed’s 2% target, any deviation from expectations in the May PCE data could significantly impact speculation about future rate cuts.
