US PCE inflation falls for first time since pandemic, but Fed caution persists

The Federal Reserve's preferred inflation gauge has finally turned down, marking a potential inflection point. However, with core readings still elevated, policymakers are unlikely to rush into rate cuts.

By Handelsavisen Newsroom · Automated 2026-07-30 12:38 UTC · 1 min read

The US Personal Consumption Expenditures (PCE) price index has declined for the first time since the onset of the pandemic, signaling a potential shift in the inflation trajectory.

This development marks a notable break from the persistent upward pressure that has characterized price dynamics in recent months.

Core inflation remains well above the central bank's 2% target, and recent data has shown resilience in underlying price pressures.

Despite the headline improvement, the Federal Reserve is expected to maintain a cautious stance.

Core inflation remains well above the central bank's 2% target, and recent data has shown resilience in underlying price pressures.

The decline in the headline PCE figure is likely driven by volatile components, such as energy prices, rather than a broad-based cooling of the economy.

Markets are likely to interpret this data as a positive signal for the eventual path of interest rates, but not an immediate trigger for easing.