The U.S. core Personal Consumption Expenditures (PCE) price index, which excludes food and energy costs, increased by 0.2% in December 2024, according to data from the Bureau of Economic Analysis.
This marks a slight uptick from the 0.1% rise in November, which had been the lowest in six months. The increase aligned with market expectations, indicating steady underlying inflation pressures.
On an annual basis, core PCE inflation remained at 2.8% for the second consecutive month, well above the Federal Reserve’s 2% target. The persistence of elevated inflation reinforces the Fed’s cautious stance on monetary policy, as policymakers weigh future rate adjustments while monitoring inflationary trends.
The December data suggests that inflationary pressures remain moderate but stubbornly above the Fed’s preferred range. While the slight monthly uptick does not indicate a significant resurgence in inflation, the steady 2.8% annual rate could influence the Fed’s decision-making in the coming months, particularly regarding the timing and extent of potential interest rate cuts in 2025.
Source: Bureau of Economic Analysis
Global markets remained under pressure as rising bond yields, elevated energy costs, and hawkish Fed expectations strengthened the outlook for higher interest rates.
Global markets remained focused on escalating Middle East tensions as rising oil prices strengthened inflation concerns and expectations for further monetary tightening.
Fed Turns Hawkish (31 August – 4 September)Global markets entered the week with renewed focus on Federal Reserve tightening after Chair Kevin Warsh used his Jackson Hole address to push back against expectations that US inflation pressures were fading. The Dollar Index held near 99.6 after Friday’s sharp advance, while Treasury yields moved higher and precious metals retreated. Markets raised the probability of a September Fed rate hike to 57% from 40% a week earlier as Warsh reiterated the Fed’s commitment to returning inflation to its 2% target.
DetailThen Join Our Telegram Channel and Subscribe Our Trading Signals Newsletter for Free!
Join Us On Telegram!
