US July PCE largely met expectations but skewed hawkish: headline inflation
remains well above the Fed’s 2% target and core PCE held at 3.3%, signaling
persistent underlying inflation and making the print modestly hawkish. The gap
between core CPI (2.5%) and core PCE (3.3%) reflects differences in weights and
methodology — a stronger July CPI does not imply inflation is near the 2% goal.
Markets will now focus on Fed official Walsh’s remarks for guidance on the
likely policy path, notably whether he views 3.3% core PCE as still too high.
