In-Depth Analysis: December PCE Inflation Data Reveals New Trends in the US Economy

The Economic Signals Behind December's PCE Data

New projections show the core PCE inflation in the US rose 0.37% month-over-month, with an annualized rate reaching 4.5%. This trend has sparked concerns about the Federal Reserve's policy direction.

Core Inflation Hits New Highs

The core PCE index is expected to rise to a 3% annual rate, the highest level since February 2025. This increase reflects sustained pricing pressures, particularly in services and housing sectors.

Overall Inflation Follows Suit

The overall PCE annual rate is projected at 2.9%, marking the highest level since March 2024. This trend suggests that price increases are still persistent across the economy, despite the Fed's efforts to curb inflation.

Implications for Future Policy

Rising inflation data may influence the Fed’s decision-making, especially regarding interest rate hikes and balance sheet adjustments. Markets widely expect more tightening measures in the near term to manage inflationary pressures.