PCE Report Heralds Rate Hike Decision Day for Fed

The upcoming US Core PCE report is expected to have a significant impact on expectations for the Federal Reserve's next move, particularly its potential rate hike decision at the October 28 meeting.

Economists predict a 0.3% month-over-month increase in core PCE, which would leave the annual rate around 3.4%. A 0.4% core reading would be difficult for the Fed to dismiss and could strengthen the case for another move at the October meeting, while a 0.2% print or lower would point in the opposite direction.

The details of the report may matter even more than usual, as the Bureau of Economic Analysis will publish its annual update to the national accounts alongside the August report. This could lead to revised inflation history and changes in methodology that might lower previously reported core inflation.