US Inflation Still Hot: The Fed’s favorite core PCE index beat expectations

Inflation continues to burn in the US: The Fed’s preferred index has been released, which the US Federal Reserve, now chaired by Jerome Powell, is closely watching to guide its monetary policy decisions.

On a monthly basis, it rose 0.6% in August, beating the expected +0.5%, significantly accelerating the pace compared to +0.1% in July.

On a year-over-year basis, core PCE rose 4.9% to an estimated +4.7%, compared to a 4.6% rise in the previous month.

On the other hand, the headline PCE index declined, growing at an annualized rate of 6.2% in August, down from +6.4% in July.

However, on a monthly basis, the PCE index rose and registered a trend of +0.3%, compared to a previous decline of 0.1%.

U.S. stock indexes slumped, with futures turning red after the numbers came out and the Federal Reserve rekindled fears of a new rate hike of at least 75 basis points.

Last week, Jerome Powell’s Fed tightened rates by 75 basis points for the third time in a row, taking US Fed Fund rates to a record high since 2008 in a range of 3% to 3.25% to tame runaway inflation.