⚡ Breaking: US core PCE inflation holds steady at 3.3% in July as expected

The US Bureau of Economic Analysis reported Wednesday that headline PCE inflation held at 3.7% annually in July, coming in hotter than the 3.6% market consensus. More critically for Federal Reserve policy decisions, the core PCE reading, which strips out volatile food and energy prices, remained steady at 3.3% as expected. This marks the Fed’s preferred inflation gauge staying elevated well above the central bank’s 2% target for the eighth consecutive month.

The mixed data complicates the Fed’s path forward as officials weigh whether additional rate hikes are necessary to bring inflation under control. While core PCE met expectations, the headline figure’s upside surprise suggests persistent price pressures remain in the economy. Traders should monitor Treasury yields and dollar strength in immediate response, as bond markets recalibrate rate hike probabilities for the September FOMC meeting.

FXnCO Insight

Dollar longs may find support on this data as higher-than-expected headline PCE keeps the door open for extended Fed hawkishness through year-end.

Source: FXStreet