Key facts
- Annual PCE inflation in the U.S. has surpassed 4%.
- This is the first time annual PCE inflation has been above 4% in three years.
- CPI is also above the Federal Reserve's 2% target.
- Traders have reduced expectations for Fed tightening by year-end.
- US first-quarter GDP was revised upward to a 2.1% annualized rate.
- Consumer spending growth was significantly downgraded.
- Consumer spending growth was nearly stalled.
- Revisions in services outlays contributed to the consumer spending downgrade.
Annual Personal Consumption Expenditures (PCE) inflation in the United States has now exceeded 4% for the first time in three years. Concurrently, the Consumer Price Index (CPI) also remains above the Federal Reserve's target of 2%. Despite these inflationary pressures, financial market participants have adjusted their outlook, reducing expectations for further tightening of monetary policy by the Federal Reserve before the end of the year.