Fed’s Preferred Inflation Gauge Holds Steady, Cementing Expected September Rate Cut

The latest personal consumption reading cements a September interest rate cut.

A customer shops for food at a grocery store in San Rafael, Calif., on March 12, 2024. Justin Sullivan/Getty Images

The Federal Reserve’s preferred inflation metric—the personal consumption expenditure (PCE) price index—came in below expectations, further supporting the central bank’s case for loosening monetary policy and cutting interest rates as early as September.

According to the Bureau of Economic Analysis (BEA), the annual PCE price index was unchanged at 2.5 percent in July, below the consensus estimate of 2.6 percent.