The Fed’s preferred inflation gauge, the Core Personal Consumption Expenditure (PCE), will be released by the US Bureau of Economic Analysis (BEA) on Friday, January 26 at 13:30 GMT and as we get closer to the release time, here are the forecasts of economists and researchers of eight major banks.
Headline PCE is expected to remain steady at 2.6% year-on-year while core is expected to fall two ticks to 3.0%. On a monthly basis, both are expected to come in at 0.2%.
TDS
We look for the December data to continue supporting the idea of inflation deceleration, with the core PCE advancing at a near-trend 0.2% MoM – and below the core CPI's 0.3% increase. Notably, the December data are likely to show that the 3m/6m momentum in core PCE prices has dropped below the 2% objective, which will add to the evidence that the worst for inflation has likely passed.
Deutsche Bank
We see core PCE growth staying at +0.1%.
NBF
The annual core PCE deflator may have progressed 0.2% MoM in December, a result which should translate into a 2-tick decline of the 12-month rate to 3.0%. Although still high, this would still be the lowest rate observed in 33 months.
SocGen
We project a 0.3% increase for the core PCE deflator, but that is a rounding up to 0.3%. The core CPI posted an increase of 0.309%. Core CPI runs faster generally than core PCE. Mostly this is due to a heavier weighting for rents and shelter that tend to grow much faster than the overall CPI. Critical now is the slowing pace of moderation in the CPI, whereas the PCE is still dropping rapidly. Sticky rents are the issue. Core PCE has substantially greater medical care components, and specifically government funded healthcare, whereas the CPI captures just household out-of-pocket healthcare costs. After a surge during COVID, government and general healthcare costs are moderating.
CIBC
Based on the December CPI report and the wider gap between CPI and PCE, we expect the core PCE deflator to be 0.2% MoM and 3.0% YoY in December.
Wells Fargo
We look for both the headline and core PCE deflators to rise 0.2% over the month, which if realized, would be slight accelerations relative to November.
Goldman Sachs
The forecast for core PCE inflation in December is 0.18%, translating to a six-month annualized rate of 1.88% and a YoY rate of 2.94%. This reflects the Fed's primary measure of inflation. Headline PCE prices are also projected to increase by 0.18% in December, corresponding to an annual rate of 2.63%.
Citi
We expect another 2.0% annualized QoQ increase in core PCE inflation and a 0.19% MoM, a stronger increase than in the past few months, but still notably softer than the recent pace of core CPI inflation.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD struggles to hold above 1.0400 as mood sours
EUR/USD stays on the back foot and trades near 1.0400 following the earlier recovery attempt. The holiday mood kicked in, keeping action limited across the FX board, while a cautious risk mood helped the US Dollar hold its ground and forced the pair to stretch lower.
GBP/USD set to swoon on holiday-shortened week
GBP/USD waffled near the 1.2550 level on Monday, kicking off the holiday trading week with a third of a percent decline as market sentiment coils. Market volumes are set to drain out of global exchanges as investors broadly hang up their hats for the Christmas holiday, and global markets will be shuttered on Wednesday.
Gold flat lines above $2,600 ahead of holiday trading week
Gold price trades flat around $2,610 during the early Asian session on Tuesday. Markets face a relatively quiet trading session ahead of the holiday trading week. The US Richmond Fed Manufacturing Index for December is due later on Tuesday.
Ethereum risks a decline to $3,000 as investors realize increased profits and losses
Ethereum is up 4% on Monday despite increased selling pressure across long-term and short-term holders in the past two days. If whales fail to maintain their recent buy-the-dip attitude, ETH risks a decline below $3,000.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.