• The personal consumption expenditures (PCE) price index from the Bureau of Economic Analysis shows core inflation has risen to 4.1% in June on a year-over-year basis, according to the latest report.
• Wall Street reacted positively as stocks gained 1.5% on average after the PCE report showed tamer results than experts predicted.
• Fed Chair Jerome Powell hinted at the possibility of another interest rate hike if data shows a slow decline, thus market participants should closely monitor macro factors before making investment decisions.
PCE Report Shows Core Inflation
The personal consumption expenditures price index (PCE) from the Bureau of Economic Analysis shows core inflation has risen to 4.1% in June on a year-over-year basis, according to the latest report . The index has declined 0.5% since May and stood 0.1% below estimations.
Wall Street Reacts Positively
In response to this news, Wall Street reacted positively as stocks gained 1.5% on average after the PCE report showed tamer results than experts predicted. Disposable personal income (DPI), personal income less personal current taxes, increased $67.5 billion (0.3%), and personal consumption expenditures (PCE) increased $100.4 billion (0.5%).
Fed Hints at Future Monetary Policy
The Federal Reserve closely watches the PCE reports to determine its future monetary policy and is chasing an aim of 2% inflation as it raises interest rates, risking a recession in doing so.. In the latest press conference, Fed Chair Jerome Powell hinted at the possibility of another hike if data shows a slow decline – thus market participants should monitor macro factors before making investment decisions according to Mike Olsen, portfolio manager at Motley Fool Asset Management..
CPI vs PCE
Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) show slightly different numbers but both are important indicators for investors looking for clues regarding future monetary policy.. CPI measures changes in prices for goods or services purchased by consumers whereas PCE takes into account all spending by individuals or households during a given period – including durable goods such as appliances and vehicles..
Overall, with moderating inflation indicated by PCE reports together with hint from Fed Chair Jerome Powell that there might be some hesitation in further rate hikes – investors need to remain vigilant about macroeconomic factors before making their next move..