PCE Data: Markets Await The Fed's Favorite Inflation Gauge

On Friday, at 16:30 GMT+4, markets will find out the latest Personal Consumption Expenditure Price Index (PCE) data, which is considered one of the important and preferred inflation indicators by the US Federal Reserve.


The PCE price index measures inflation, shows consumer behavior and gives an indication of inflationary pressures in the economy. Thus, it is a measure of the change in the prices of goods and services purchased by consumers, excluding food and energy.


If the reading is higher than expected, it indicates an increase in inflationary pressures, which may prompt the Federal Reserve to raise interest rates in order to control inflation, and this is expected to positively affect the US dollar, according to analysts.


On the other hand, if the reading comes in lower than expected, this indicates that the demand for goods and services has declined and thus the fears of inflation have decreased, which may prompt the Federal Reserve to turn to a less hawkish monetary policy to stimulate economic activity.


Expectations indicate that the index will record a reading of 0.3%, parallel to the previous reading. In general, fluctuations in prices are expected during the release of the data, given that it is the last data related to inflation before the US Federal Reserve meeting that will be held on 3-5-2023, as expectations indicate that the US Federal Reserve will raise interest rates by 25 basis points to reach 5.25%.



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