After strong US growth data only partially soothed downturn fears, core PCE is on the radar. The Federal Reserve's preferred inflation gauge is set to fall – but not quickly enough to provide the relief of lower rates. Live coverage.
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Why Core PCE shakes markets
The core Personal Consumption Expenditures Price Index (core PCE) is the preferred gauge of inflation for the Federal Reserve (Fed) – the world's most powerful central bank. It excludes volatile energy and food prices, which are set on global markets and have a limited impact by interest rates.
US GDP came out better than expected at 2.8% annualized growth in Q2, far above 2% expected. However, it also included an upgraded core PCE component – which caused market participants to fear higher inflation in the core PCE release for June.
The Fed holds its rate meeting on July 31, and no interest rate change is expected. However, investors circle September as the time for the bank to cut interest rates.
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