โ๏ธโญThe Current PCE INFLATION update๐ฅ
๐ซ- *Headline PCE Inflation*: 2.84% year-over-year change as of September 2025, with a 0.31% month-over-month change.
๐ซ- *Core PCE Inflation*: 2.87% year-over-year change as of September 2025, with a 0.24% month-over-month change.
๐ซ- *Recent Data*: August 2025 PCE inflation accelerated to 2.7% year-over-year, up from 2.6% in July, while core PCE remained steady at 2.9%.
โ *What's Driving Inflation?*
๐ซ- *Tariffs*: Recent tariffs are contributing to inflationary pressures, with Goldman Sachs estimating a 0.10 percentage point impact on August's PCE reading.
๐ซ- *Strong Consumer Demand*: Sustained consumer spending is also driving inflation, making it challenging for the Fed to achieve its 2% target.
โ *Fed's Response*
โญ- *Interest Rate Decision*: The Fed has cut interest rates by 25 basis points in September 2025, but future rate cuts are uncertain due to sticky inflation.
โญ- *Monetary Policy*: The Fed aims to balance progress on inflation with sustained labor market strength, making its policy decisions crucial in the coming months.
โ *Market Impact*๐ฅ
๐ซ- *Market Expectations*: Markets are pricing in a 91.9% chance of a 25 basis point rate cut in October 2025, with a 78.8% chance of a deeper cut by December 2025.
๐ซ- *Economic Uncertainty*: The PCE report will significantly influence the Fed's next steps, and investors are closely watching for signs of inflation cooling or heating up.
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