PCE Inflation: Wall Street & Economists Estimate Fed Rate Cuts Timeline

by

As a seasoned crypto investor with a deep understanding of the market dynamics and economic indicators, I’ve closely been monitoring the upcoming release of the PCE inflation data from the U.S. Bureau of Economic Analysis. Based on my analysis of historical trends and recent market developments, I believe that a potential decrease in PCE inflation could provide further bullish cues for both the stock and crypto markets.

Traders in the stock and crypto markets eagerly anticipate the publication of the US Federal Reserve’s preferred measure of inflation, PCE (Personal Consumption Expenditure), for potential buying signals. The U.S. Bureau of Economic Analysis will unveil the PCE price index today, with experts predicting a deceleration in PCE inflation for the second month in a row to 2.5% from 2.6%. This anticipated decrease could lead the Federal Open Market Committee (FOMC) to consider lowering interest rates.

Federal Reserve representatives have more recently expressed a lenient perspective regarding monetary policy adjustments, implying a potential shift towards decreasing interest rates. Market analysts anticipate the initial reduction in U.S. Fed rates occurring in September.

Wall Street Estimates On PCE Inflation Data

According to recent economic analysis by experts, the pace of price increase for personal consumption expenditures (PCE) is anticipated to slow down even more. Specifically, the market predicts an annual rate of 2.5% for PCE inflation, which represents a decrease from the previous month’s rate of 2.6%. Furthermore, the projected annual core PCE inflation is also expected to drop to 2.5%, marking a new low since March 2021, down from the current rate of 2.6%.

As an analyst, I would express it this way: The anticipated monthly increases in PCE inflation and core PCE inflation are both projected to be 0.1%. However, according to the Federal Reserve’s latest economic forecasts, annual PCE inflation is estimated at 2.6% and core PCE inflation at 2.8% for the current year.

Major financial institutions such as JPMorgan, Morgan Stanley, Bank of America, Goldman Sachs, Nomura, and UBS project a median yearly growth rate of 2.5% and a monthly growth rate of 0.1%. These estimates also indicate that core Personal Consumption Expenditure (PCE) inflation will reach 2.5%, which aligns with market expectations. Furthermore, the three-month annualized rate of US core PCE inflation is predicted to hit the Federal Reserve’s target rate of 2%.

PCE Inflation: Wall Street & Economists Estimate Fed Rate Cuts Timeline

Bitcoin and Crypto Market Prepares for Rally

Based on Morgan Stanley’s analysis, there have been notable strides made in addressing inflation, paving the way for the Federal Reserve to move nearer to implementing interest rate reductions. Chairman Powell is advised to express heightened assurance during his communication.

Morgan Stanley teamed up with Goldman Sachs to anticipate a total of three interest rate reductions from the Federal Reserve, with the first one projected to occur in September. Jerome Powell, as the Fed Chair, is likely to continue hinting that the central bank is considering reducing rates further, without providing a definite schedule.

In the past day, Bitcoin’s price surged by nearly 5%, reaching above $67,300, at the Bitcoin Conference which stirred optimistic market feelings. The minimum and maximum prices during this period were recorded as $63,473 and $67,466 respectively. Moreover, there has been a slight uptick in trading volume, implying heightened investor activity.

At present, the US dollar index (DXY) hovers around the mark of 104.38, with a predicted decline in value following the expectation of Donald Trump’s victory in the presidential election. Simultaneously, the US 10-year Treasury yield has decreased to 4.244% today. Contrarily, Bitcoin is reacting against these trends, alleviating the pressure.

Read More

2024-07-26 14:36