US Department of Commerce agency releases PCE, country's inflation (Image: COFFEEMEPLEASE/Pixabay)
The price index (PCE) of the USA (USA) rose 0.1% in August, as released by the Bureau of Economic Analysis (BEA) this Friday (27). In one year, the PCE was 2.2% and came closer to the 2% target pursued by the Federal Reserve (Fed).
And he went up inflation last month comes after an increase of 0.2% in July. Until that month, the index accumulated an increase of 2,5% in 12 months.
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Monthly and annual variations were below market projections, of 0.2% and 2.3%, respectively.
Excluding the volatile food and energy components, core PCE rose 0.1% in the eighth month of the year, after advancing 0,2% in July. In the annual comparison, it increased 2.7%.
Fed began the cycle of interest cuts
Last week, the Federal Open Market Committee (Fomcits acronym in English) began the cycle of monetary easing and cut fees reference by 0.50 percentage points (pp).
The rate, which had been in the range of 5.25% to 5.50% since July 2023, was reduced to 4.75% to 5% per year. This is the first cut in more than four years, a period in which the North American central bank imposed restrictive conditions to contain the inflation.
“Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have slowed, and the unemployment rate has risen, but remains low. Inflation has made further progress towards the 2% target, but remains high”, says the statement.
The market is closely monitoring the data that will be released in the coming weeks to find out whether the Fomc will continue with the rate of 0.50 pp interest rate cuts or reduce it to 25 pp
Until then, bets are divided between a smaller reduction (48.6%) at the November meeting and a larger hawkish (51.4%), according to the CME FedWatch Tool.