US PCE Data: Core Inflation Holds Steady at 2.8%, Rate Cut Odds Rise

The US Personal Consumption Expenditures (PCE) price index data for February 2025 shows a steady disinflation trend, confirming market expectations. The core PCE rate rose 2.8% year-over-year in February, matching economist predictions and holding steady from the previous month.

Headline PCE increased 2.5% annually in February, slightly above January's 2.4% reading. On a monthly basis, headline PCE rose 0.3%, while core PCE also increased 0.3% month-over-month.

The data reinforces the idea that the Federal Reserve will maintain its current interest rate stance at the upcoming May meeting. Markets are pricing in a 60% probability of the first rate cut occurring in September 2025, according to CME FedWatch data as of March 28.