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Expectations point to a 0.3% monthly rise in both headline and core PCE while methodology changes may trim earlier prints; Fed officials still see room for one more hike.
The Federal Reserve’s preferred inflation gauge arrives Wednesday with expectations centered on a 0.3% monthly increase for both headline and core personal consumption expenditures (PCE), according to the Dow Jones consensus. That pace would leave the 12-month rates roughly unchanged at 3.7% and 3.3%, still above the Fed’s 2% objective, and the release will also include consumer spending and income data.
Policy signals remain open to further tightening. At their September meeting, Federal Open Market Committee participants penciled in the likelihood of one more rate increase this year. Fed Vice Chair for Supervision Michael Barr said Tuesday he doesn’t yet see a clear trend back to 2% and that “further policy adjustments are likely to be needed” to ensure timely progress. New York Fed President John Williams said there is “no need for urgency” but allowed that “one further upward adjustment” may be necessary.
Private-sector voices echoed the stickiness message. Dan North, senior economist at Allianz Trade, said the Fed is likely to view an unmoving core rate as “still way above target,” leaving little reason to ignore persistent pressures.
Revisions complicate the optics. The Bureau of Economic Analysis is updating how it measures prices in categories including legal services, software and computer accessories, and portfolio management services. Those changes are expected to trim some prior PCE readings, improving the backward look without necessarily changing the near-term trajectory.
Consumer demand still looks resilient. Bank of America reported total debt and credit card spending up 6.9% year over year for the week ended Sept. 19, including a 26.5% jump in gasoline. Excluding gas, spending rose 5.7%. The PCE release will update the official readings for household outlays and incomes alongside the price measures.
On near-term dynamics, Goldman Sachs expects the next couple of months of inflation data to be “somewhat less favorable before a more benign trend reasserts itself.”
For investors parsing the print, the monthly core pace is the cleanest read on current momentum. At 0.3% month over month, the implied annualized run-rate is roughly 3.6%–3.7% — a calculation that keeps the focus on incremental progress rather than any revision-driven changes to year-ago comparisons.
This content is for informational purposes only and does not constitute financial advice.
🧠 HafidWatch Take
Sustained monthly core inflation around 0.3% keeps annualized rates well above target, suggesting that the Fed will likely base any final rate hike on clear evidence of slowing momentum rather than minor revisions to past data. This means policymakers may wait for a noticeable downward shift in monthly pace before concluding the tightening cycle, highlighting the importance of upcoming readings that could signal whether inflation is genuinely easing.
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