Jackson Hole Eve: "Inflation Thunder" to Be Revealed! July Core PCE to Rise to 3.3%, September Rate Hike Expectations Heating Up

BlockBeats News, August 26th. At 8:30 PM Beijing time tonight, the U.S. Department of Commerce will release the Personal Consumption Expenditures (PCE) Price Index for July. The market expects a 0.1% month-over-month increase in overall PCE for July, with the year-over-year inflation rate falling from 3.7% in June to 3.6%; the core PCE month-over-month may rise from 0.1% to 0.2%, with the year-over-year rate remaining at 3.3%, marking the 65th consecutive month above the Fed's 2% inflation target.

It is worth noting that the price increase in the AI industry chain, the stock market's high valuation driving up portfolio management fees, and the rising energy costs due to the Middle East situation could all be potential drivers of core inflation. Goldman Sachs expects that the stock market valuation factor may contribute approximately 0.11 percentage points to the core PCE month-over-month increase in July.

Of more concern to the market is the U.S. Bureau of Economic Analysis' plan to comprehensively adjust the PCE calculation method by the end of September, which may involve adjusting the prices of categories such as computer hardware, stock portfolio management, and legal services in the future, and possibly retrospectively revising historical data, increasing the difficulty of interpreting inflation data.

Currently, there is a growing divergence in the market's expectations for the Fed's September policy path. The CME "FedWatch" shows a 59.9% probability of the Fed keeping rates unchanged in September, with a 40.1% probability of a 25 basis point rate hike. The market is also awaiting this week's Jackson Hole Symposium to hear from Fed Chair Powell for the latest signals on inflation and future rate policy.