Fed’s main inflation measure matches estimates

Fed’s inflation target

Despite this slight moderation, inflation continues to exceed the Federal Reserve’s long-run target of 2 percent. The central bank closely monitors the PCE index, particularly core inflation figures, as a key indicator for monetary policy decisions.

Economic indicators

The report also provides information on personal income and expenditure. Personal income increased by 0.2%, which is lower than the forecast 0.4%. At the same time, personal expenditure increased by 0.3%, in line with forecasts.

Market forecast

Given the inflation data aligning with expectations and the slight decline in the PCE index, the market outlook appears cautiously optimistic. The data supports the possibility of an interest rate cut in September, which could boost market sentiment. However, with inflation still above the Fed’s target, traders should remain vigilant for any changes in monetary policy signals. The near-term outlook is quite bullish, but traders should closely monitor upcoming economic data and Fed communications for further confirmation of this trend.