July 21, 2024

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US PCE Inflation Decreases as Expected – Bitcoin Price Steady

US PCE Inflation Decreases as Expected – Bitcoin Price Steady

Today, the latest figures from the US Personal Consumption Expenditures (PCE) price index were released, an important measure of inflation for the Federal Reserve. These figures are crucial to the central bank’s monetary policy.

Core inflation and the general price index decline

Following previous signs of lower inflation from the Consumer Price Index (CPI) and Producer Price Index (PPI), the PCE numbers may provide confirmation that inflation is on its way to the desired 2.0%.

Today’s Personal Consumption Expenditure figures show that US core inflation fell slightly in May, as expected. According to US government data, annual core inflation reached 2.6 percent in May, up from 2.8 percent in April. This decline is consistent with economists’ expectations.

The general price index for personal consumption expenditures reached 2.6% in May, compared to 2.7% in April. Here too, a decline of 2.6% was expected.

In addition, income rose 0.5 percent in May, compared with economists’ expectations for a 0.4 percent increase. Americans’ spending rose 0.2 percent in May, after a 0.1 percent increase in April. A 0.3 percent increase was expected here.

Monetary Policy Implications

While these data indicate that inflation in the United States is actually declining, it may provide scope for the Federal Reserve to reconsider and adjust its monetary policy to suit current economic conditions.

However, since the slight decline in personal consumption expenditures was already expected by most analysts, the financial markets and the price of Bitcoin barely reacted to these numbers.

The Fed has indicated that it does not want to consider cutting interest rates until inflation moves toward 2.0%. So it looks like investors will have to be patient for a while.

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