The Fed's preferred inflation gauge is out, but many uncertainties remain around Warsh

Odaily News The U.S. PCE price index has been released, serving as the Fed's preferred inflation gauge. The annual PCE inflation rate stands at 3.7%, unchanged from June. Excluding the volatile food and energy categories, the core PCE inflation rate is 3.3% year-over-year, also flat compared to June. Since this report incorporates other inflation data previously released, PCE figures typically align closely with investor expectations. However, amid the Fed's ongoing inflation concerns, this report further clarifies the inflation picture, and Fed Chair Warsh is set to deliver a key speech on Friday.

The U.S. CPI data brought good news in July, with core CPI falling to a relatively moderate 2.5%. But the PCE inflation rate weights different spending categories differently, so it has consistently shown notably stronger performance. At this point, there remain many uncertainties regarding how Warsh views the inflation challenge he has inherited. He has yet to add his own economic projections to the quarterly "dot plot," which summarizes Fed officials' forecasts for the economy and interest rates. Additionally, he has not indicated whether he might support rate hikes at upcoming meetings — an issue that has already caused divisions among Fed officials. (Jin10)