Today, the latest figures from the Personal Consumption Expenditures (PCE) Price Index from the United States, an important inflation gauge for the Federal Reserve, were published. These figures are crucial for the central bank’s monetary policy.

Decline in core inflation and general price index

After earlier signals of falling inflation from the Consumer Price Index (CPI) and the Producer Price Index (PPI), the PCE figures may provide confirmation that inflation is on its way to the desired 2.0%.

Today’s PCE figures show that US core inflation fell slightly in May, as expected. According to US government data, annual core inflation was 2.6 percent in May, up from 2.8 percent in April. This decline is in line with economists’ expectations.

The general PCE price index came in at 2.6 percent in May, down from 2.7 percent in April. Here too, a decline to 2.6 percent had been expected.

In addition, incomes rose 0.5 percent in May, while economists had expected an increase of 0.4 percent. American spending rose 0.2 percent in May, after a 0.1 percent increase in April. An increase of 0.3 percent had been expected.

Implications for monetary policy

While this data suggests that inflation in the US is actually easing, it may provide room for the Federal Reserve to reconsider its monetary policy and adjust it to current economic conditions.

However, since the slight decline in PCE was already predicted by most analysts, the financial markets and the Bitcoin price hardly reacted to these figures.

The Federal Reserve has indicated that it will not consider cutting rates until inflation moves toward 2.0%, so it seems investors will have to be patient for a while longer.

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