Naman Agarwal’s Post

PCE vs CPI: By one measure inflation is closing in on the Federal Reserve’s 2% target. By another it is still far away. Whether, and how, that gap closes could be critical to Fed plans this year. The article discusses the discrepancy between two key inflation metrics, the Consumer Price Index (CPI) and the Personal Consumption Expenditures price index (PCE). While CPI shows higher inflation rates, PCE is preferred by the Federal Reserve. Differences in weightings of items like housing and healthcare contribute to this gap. The Fed's focus on PCE could impact future rate decisions. Economist Omair Sharif predicts a wide gap between CPI and PCE inflation for most of the year, with both measures eventually cooling down. #InflationMetrics #FederalReserve #ConsumerPriceIndex #PersonalConsumptionExpenditures #EconomicIndicators #FedPolicyDecisions #CorePCEIndex #InflationAnalysis #MarketImpact Source: Wall Street Journal, ChatGPT https://lnkd.in/ez-BB5_e

G-10 Inflation Monitor 🌏 - The US Consumer Price Index (CPI) rose 3.3% year-over-year in May, down from 3.4% in April. - There was no change in prices from April to May, which is better than the expected slight increase. - The index for all items excluding food and energy, a key measure for the Federal Reserve, rose only 0.2% in May. - Shelter costs, including rent, continue to be a major factor driving inflation, although the pace of increase is slowing. - This data suggests the Federal Reserve may be winning its fight against inflation, potentially leading to slower interest rate hikes in the future. What are your thoughts on the FED rate cuts? 𝑵𝒐𝒕𝒆: 𝑻𝒉𝒆 𝒎𝒐𝒏𝒊𝒕𝒐𝒓 𝒅𝒊𝒔𝒑𝒍𝒂𝒚𝒔 𝒕𝒉𝒆 𝒅𝒂𝒕𝒂 𝒂𝒔 𝒐𝒇 𝟎𝟔/𝟏𝟏/𝟐𝟎𝟐𝟒 #G10InflationMonitor #USCPI #InflationData #FederalReserve #EconomyWatch #RateCuts #ShelterCosts #MonetaryPolicy #InterestRates #EconomicUpdate #InflationFight #CPIReport #EconomicTrends #FinanceNews

 US Inflation and way forward for the Fed The month of March saw consumer prices in the US exceeding market expectations. Rising inflation could potentially delay any rate cuts by the US Fed.   In his recent blog, Nikhil Mohan, Economist, Franklin Global Fixed Income shared his insights about the recent inflation readings in the US and how could it impact the Fed’s decision to start reducing policy rates this year. A few highlights of his blog are as below: 🌍 On a monthly basis, the US headline and core inflation exceeded market expectations—both rising 0.4%.   🌍 The core measure has now risen at this pace (0.4%) for three successive months.   🌍 On a six-month annualized basis, core CPI (CPI excluding food and fuel) is now near 4%, while supercore CPI (core services excluding housing) inched above 6% (the highest since Oct 2022).   🌍 Our base case has increasingly turned towards a September rate cut and 50 basis points (bps) of cuts in total this year.   🌍 If inflation were to continue reaccelerating and/or stall at its current pace, we wouldn’t rule out a further delay in rate cuts (beyond September). For the detailed blog, please click 👇

US February Spending, Income & Inflation: Spending up 0.8%, income 0.3% while the Fed' s primary inflation metric advanced 0.3% on the month & 2.5% from one year ago. Core PCE increased 0.3% on the month & 2.8% Y/Y. US PCE Inflation: 2.5% year over year increase is well within what a forward looking central banker would consider tolerable and on way to the 2% target. In my estimation this is consistent with a June rate cut and three overall reductions in the federal funds policy rate this year.

A constant decrease in inflation in the US could suggest a first cut in interest rates by the Fed as early as the end of Spring. Has this expectation already being priced in given the bull market we have been witnessing since the end of 2023? #inflation #fed #interestrates

May’s PCE data provided some relief for nervous investors hoping to see inflation return to its downward trend after a first-quarter setback. The Fed often points to the three-month rate as the best indicator of present conditions, and that measure has fallen to its lowest level since December. Yet, the Fed has been vocal in stressing that it needs longer term measures to show sustained declines before it will consider cutting rates. #CommonsCapital #inflation #wealthmanagement

Inflation metrics such as the CPI and PCE play a critical role in shaping both personal finances and broader economic strategies. While the CPI makes headlines, the Fed relies on the PCE to guide policy decisions. Understanding the differences between these parameters is essential to making informed financial choices. Keep an eye on both the CPI and PCE to get a comprehensive view of inflation trends and their impact on financial well-being. #Inflation #EconomicIndicators #FedPolicy

Why is the Fed still focused on raising rates with inflation down? In our latest video, we break down the latest data on inflation and interest rates. While a Federal Reserve member suggests more rate hikes, our analysis of key price indexes reveals a different story. Explore how the Consumer Price Index (CPI), Producer Price Index (PPI), and Personal Consumption Expenditure (PCE) index show a consistent downward trend in inflation. Discover the real impact of interest rates on housing and goods costs, and why inflation might not be the threat it’s portrayed to be. Link in the comments What are your thoughts on the current inflation trends? Let us know in the comments below! #InterestRates #Inflation #FederalReserve #EconomicTrends #GlobalEconomy

This morning's latest read on inflation underscores the ongoing struggle and painfully slow pace of progress in the Fed's fight to reinstate price stability. With the headline and core measures holding steady, as well as the supercore reading little changed, fluctuating in a range between 3.3% and 3.6% since November, against the backdrop of yesterday's downward revisions to first-quarter growth, the Committee's window to tackle inflation against a still-solid economy is far from finite. Consumers continue to spend and businesses continue to invest, but there is a growing sense of fatigue setting in amid elevated prices and borrowing costs.