The Federal Reserve’s preferred inflation measure, the Core PCE Price Index, missed expectations across the board according to data just released, and fell below last month’s levels.

This fall follows official data earlier this month that showed US headline inflation falling in July from 9.1% to 8.5%, mainly due to a slowdown in energy costs, while core inflation remained steady at 5.9%, beating market expectations of 6.1%.

Today’s data may add to the growing feeling that inflation in the US, while still extremely high, has topped and that the recent series of rate hikes by the Federal Reserve is having an impact on price pressures. While the Fed is highly unlikely to pivot towards a more dovish monetary policy, the central bank has said that the future path of rate hikes is data dependent and today’s fall will have been noted.

The US dollar slipped post-release but little is expected in terms of further movement ahead of Fed chair Jerome Powell’s speech at 15:00 UK at the Jackson Hole symposium. The markets have been in a holding pattern this week waiting for Powell’s words which are likely to reinforce that the Fed will keep on hiking rates until inflation is seen falling towards the target.
 

US Dollar (DXY) 3-Minute Price Chart

(Click on image to enlarge)

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