April’s core PCE inflation data may show a 0.3% monthly gain and 3.3% annual increase, reinforcing expectations for prolonged Fed tightening.
The US Bureau of Economic Analysis will release April’s Personal Consumption Expenditures Price Index, the Federal Reserve’s preferred inflation gauge, on Thursday. Core PCE, excluding food and energy, is forecast to rise 0.3% month-over-month, matching March’s increase, while the annual rate climbs to 3.3%. Headline PCE inflation is expected to reach 3.8%, its highest since May 2023.
Markets are closely watching the report as Fed officials weigh further policy moves amid persistent price pressures. The data arrives as investors assess the likelihood of a 25 basis point rate hike by year-end, with current market pricing reflecting a 50% probability. Geopolitical tensions, including the Middle East conflict, add uncertainty to the outlook.
Minneapolis Fed President Neel Kashkari’s recent dissent on policy easing underscores divisions within the central bank. Traders will parse the report for signs of whether inflation remains sticky, potentially delaying rate cuts or prompting further hikes.