Analyst: U.S. PCE data expected to bring good news for the Fed
Some analysts have said they expect core PCE inflation to post its slowest gain so far this year in May, which is good news for policymakers. Falling gasoline prices and generally declining commodity inflation will limit economic growth. But that may only give the Fed a temporary respite as spending categories with sticky inflation continue to put upward pressure on the inflation gauge, with unfavorable base effects expected in the second half of this year. Analysts said their estimate is that the monthly core PCE rate will slow to 0.10% in May, the lowest level so far this year. The annual core PCE rate should fall to 2.6%, the lowest level since March 2021. In addition, the headline PCE monthly rate will be barely close to 0.1% and the year-over-year growth rate will be 2.6%.
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