Core PCE growth rate slows down

The monthly growth rate of the core personal consumption expenditure (PCE) price index in the United States in May was 0.1%, the smallest increase in six months. The annual growth rate is 2.6%, reaching a new three-year low. These data are in line with market expectations, indicating a easing of inflationary pressure in the United States.

Personal expenses and income

The monthly growth rate of personal expenditure in May was 0.2%, lower than expected, but adjusted for inflation, it increased by 0.3%. The monthly growth rate of personal income has increased from 0.3% in April to 0.5%, the largest increase since January 2023.

Super Core Inflation

The monthly growth rate of super core inflation in May was 0.1%, the smallest increase since October last year, and the annual growth rate slowed to 3.39%, recording growth for the 49th consecutive month.

Market expectations

After the data was released, according to the FedWatch tool of the ChiNext, the current market expectation is that the probability of a 25 basis point rate cut by the Federal Reserve in September is 61.1%, the probability of interest rates remaining unchanged is 32.3%, the probability of a 50 basis point rate cut is 6.6%, and the probability of further rate cuts in December is 45%.

expert opinion

KPMG Chief Economist Diane Swonk said that signs of commodity price deflation and economic weakness have increased the likelihood of the Federal Reserve lowering interest rates in September.