Federal Reserve news is in. The Personal Consumption Expenditure (PCE) price index – a fancy term for how much stuff costs – fell to a 2.5% annual increase in June, down from 2.6% in May. Economists saw this coming, so no one is shocked. But this dip makes some experts think the Fed might cut interest rates in September.
What’s the PCE index, you ask? It’s the Fed’s favorite way to measure inflation, looking at prices for goods and services that Americans typically buy. In June, the index showed a smaller price increase than in May. But when you exclude food and energy (because those prices jump around a lot), the index stayed the same.
Meanwhile, personal income didn’t grow as much as hoped, rising only 0.2% from May, below the expected 0.4%. This suggests people aren’t making as much money, which could mean less spending.
Market Reactions: Before this report, traders were sure there’d be a rate cut in September. Now, they’re even more convinced, expecting more cuts by December.
After the report, Treasury yields dipped slightly, with the two-year yield dropping to 4.41%. Stock futures rose, with S&P 500 and Nasdaq 100 contracts climbing.
So, while the Fed’s favorite inflation measure shows mixed results, the overall vibe points toward possible rate cuts in the near future. Stay tuned for more economic drama.
We produced a video on the topic as well:
