PCE 2.9%, FED Rate Cut Risk 86%: 3 Things Powell Should Note Now
Inflation as measured by the Personal Consumption Expenditures (PCE) index slowed to 2.9% in July 2025, yet the pace remains insufficient to allay market anxieties. Traders are pricing in an 86% probability of a Federal Reserve rate cut in September, reflecting heightened expectations for monetary easing.
Jerome Powell faces a delicate balancing act. Premature policy adjustments risk reigniting inflationary pressures, while excessive caution could trigger a market selloff. The Fed chair must navigate these crosscurrents with precision, as Wall Street hangs on every signal from the central bank.