PCE core y/y
The Fed’s mandate is to maintain inflation close to 2% however which inflation measure? The Fed seems at each CPI and PCE however its most well-liked measure is PCE.
At present’s core CPI quantity rose 0.39% month over month however that will not be repeated with the PCE report, in keeping with a notice from Morgan Stanley. In a notice to shoppers after CPI, they are saying that changes in core PCE will imply it rose 0.29% m/m.
Whereas that might push the six-month core CPI quantity to 2.2% from 1.9% (annualized), it is not far off of the Fed’s goal. It additionally could also be a motive that Fed officers do not overreact to today’s CPI data.
