Yes

>>PCE Inflation Falls to 2.8%: A Key January 2025 Benchmark for the Federal Reserve

PCE Inflation Falls to 2.8%: A Key January 2025 Benchmark for the Federal Reserve

crypthub

about 21 hours ago

PCE Inflation Hits 2.8%

In January 2025 the personal consumption expenditures (PCE) price index fell to 2.8% year‑over‑year, the Fed’s preferred gauge and a step toward its 2% target. This follows a drop from 3.1% in December and reflects continued disinflation after the 2022 peak of 7.1%. The decline signals that the aggressive tightening cycle since mid‑2023 is yielding measurable results.

Core Inflation and Sector Drivers

Core PCE, which excludes food and energy, slipped to 3.0%, narrowing the gap with headline inflation. Lower energy prices, smoother supply chains, slower wage growth, and decelerating housing costs were the main contributors. Consumer spending shifted to price‑sensitive choices, further pressuring retailers.

Federal Reserve Implications and Market Response

With inflation edging closer to 2%, the Fed is likely to hold rates steady at its March meeting while watching for confidence to signal cuts in the second quarter of 2025. Treasury yields fell about 10 basis points and equities rose after the release, while the dollar slipped modestly. Analysts stress that geopolitics and labor dynamics remain risks to the disinflation path.

Household Effects and Global Context

Real wages turned positive, rising about 1.3% as earnings outpaced 2.8% inflation, boosting consumer sentiment and discretionary spending. Similar disinflation trends appeared in the eurozone (2.3%) and the UK (2.6%), easing imported inflation pressures. Emerging markets benefit from reduced U.S. rate‑tightening pressure, giving them more policy flexibility.