Key facts
- US PCE inflation is projected to rise to 4.1% annually in May.
- US PCE inflation was 3.8% in April.
- Core PCE inflation is expected to reach 3.4% in May.
- PCE inflation is a key metric for the Federal Reserve.
- Rising inflation may fuel expectations of further rate hikes.
- Bitcoin has extended its decline.
- Broader financial markets are impacted by inflation data.
Annual US Personal Consumption Expenditures (PCE) inflation is projected to climb to 4.1% in May, marking a significant rise from the 3.8% recorded in April. The core PCE price index, which excludes the more volatile categories of food and energy, is also anticipated to increase, reaching an estimated 3.4% for May. This inflation data is considered a primary gauge by the Federal Reserve when setting monetary policy. The projected uptick in inflation could bolster expectations among market participants for additional interest rate hikes by the Federal Reserve. Such a prospect has already begun to influence financial markets, with Bitcoin experiencing an extended decline. The broader market sentiment appears to be reacting negatively to the potential for prolonged higher interest rates, which can reduce the attractiveness of riskier assets and increase borrowing costs across the economy.