US PCE Inflation Cools to 8-Month Low as Markets Brace for Fed Response

The Commerce Department’s latest data shows monthly PCE inflation rising just 0.1% in April, aligning with forecasts while the annual figure slipped 0.1 percentage point below expectations. Core PCE—the Fed’s preferred gauge—registered 2.5% year-over-year, dipping below the central bank’s target range. This cooling inflation landscape leaves traders speculating whether the Fed will maintain, hike, or cut rates in coming months.

Meanwhile, consumer spending growth slowed sharply to 0.2% despite personal income surging 0.8%, suggesting Americans are prioritizing savings over expenditures. The economic uncertainty was compounded by former President Trump’s accusation that China violated trade agreements, triggering a selloff in Dow futures and rattling risk assets.