U.S. Core PCE Inflation Slows, Cooling October Fed Hike Bets
The core personal consumption expenditures price index rose 3% year over year in August, below the 3.3% forecast.
U.S. core inflation slowed more than expected in August, reducing bets on a Federal Reserve rate hike in October.
The core personal consumption expenditures (PCE) price index rose 3% from a year earlier, its lowest annual increase since February and below the 3.3% forecast. The index increased 0.2% from July, compared with expectations for a 0.3% gain.
Overall PCE inflation rose 3.4% year over year and 0.3% month over month, with both readings below expectations. The data showed consumer resilience at the same time: personal spending increased 0.9% in August, while inflation-adjusted spending rose 0.6%, its largest monthly increase since March 2025.
Short-term interest-rate futures moved higher after the release, while the probability of the Federal Reserve leaving rates unchanged in October stood at 52.9%. The two-year Treasury yield briefly fell more than 5 basis points to 4.843%, while spot gold rose more than $20 to above $4,210.
