Pantheon Macroeconomics forecasts an increase in core PCE inflation to 2.8% from the previous 2.6%.
They predict a month-on-month rise of 0.36% in core PCE for February.
Pending import/export data will also affect PCE figures.
Core PCE Inflation Trends
Pantheon Macroeconomics expects core PCE inflation to move up to 2.8% from 2.6%, signalling more pressure on prices. A 0.36% monthly rise is anticipated for February, indicating stronger momentum in inflation trends.
However, with trade figures still to be released, there remains an element of uncertainty regarding those projections. Imported goods and services shape price changes, and any surprises in those numbers could shift expectations. The upcoming data may add another layer of complexity to inflation assessments, especially if they diverge from estimates.
Higher core PCE inflation challenges assumptions about when rates might ease. With inflation still elevated, there is less room for policymakers to pivot quickly. A higher reading on this metric reinforces the argument for keeping borrowing costs restrictive for longer.
Keeping an eye on additional inflation components aids in navigating short-term trends. While the headline figure gives an overall sense of direction, underlying factors—such as goods versus services inflation—offer further insight into price pressures. Those details shape expectations around whether inflation remains sticky or begins to cool.
Market Reactions And Expectations
Market pricing may shift as fresh data comes in. Unexpected changes in inflation can alter expectations for future rate movements, prompting adjustments in positioning. The trajectory of rate expectations depends not only on PCE but also on labour market signals and broader economic conditions.
Each report increases or reduces confidence in current estimates. Markets will react as new evidence emerges, either reinforcing expectations or challenging previous assumptions. Staying attuned to these shifts prevents misjudging momentum.
