The highly anticipated U.S. July PCE inflation report released on Wednesday is out: overall PCE is 3.7, and the core PCE that the Federal Reserve focuses on remains at 3.3. This slightly disappointed the market. The market expected the PC to continue falling in line with the two prior months’ trend, but this month the downward move abruptly stopped—it has stalled.
On Tuesday, Federal Reserve governor Collins said that if he could see this inflation data continue to fall, he could keep interest rates unchanged. But if the PCE were to stay at this high level, he would need to consider raising rates. The outcome matched his comments exactly—he reflects the sentiment of most Fed policymakers.