July PCE data expected to influence Fed policy

The July personal consumption expenditures price index will be released, with markets expecting headline inflation to rebound to about 3.6% year over year and core PCE around 3.3%, with month-over-month gains near 0.2%. Core PCE has exceeded the Fed’s 2% target for 65 consecutive months, signaling ongoing inflation pressure. Analysts note that rising costs in AI-related software and data-center investments are contributing to persistent core inflation. The data will shape expectations for the Fed’s policy path, including the likelihood of a rate decision at the September meeting. Article 4 adds that the calendar includes the US second-quarter preliminary GDP estimate and crude oil inventories, which will further influence the inflation outlook. The inflation debate at the Fed remains divided, with some policymakers nudging toward restraint and others advocating patience as the central bank reevaluates its inflation metrics framework under new guidance from leadership.