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%, signalling 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 wheth

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%, signalling 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.