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US DATA: Core PCE Tracking Smaller Overshoot Of FOMC Forecast Post-PPI

US DATA
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  • Unrounded core PCE estimates have been revised down from ~0.20% M/M post-CPI to somewhere in the region of 0.13-0.14% M/M after today’s PPI report.
  • Core PCE estimates: Barclays (0.11), MS (0.11), GS (0.13), Nomura (0.13), BofA (0.14), UBS (0.15) and Citi (0.18).
  • That would mark a sizeable moderation after two months averaging 0.27% M/M, although despite that it still leaves a very good chance that core PCE inflation will overshoot the previous FOMC forecast for Q4 2024. It comes as the committee looks to refresh its SEP at next week’s meeting.
  • As a purely indicative scenario, a 0.13-0.14% M/M increase in Nov before 0.2% M/M in Dec (simply based on six-month average to Oct) would see average core PCE inflation of 2.8% Y/Y in Q4.
  • That’s versus the 2.6% the median FOMC member projected back in the September SEP (having reversed its prior upward revision to 2.8% back in June).
  • It also leaves a trajectory potentially close to those from the most hawkish members of the FOMC, with an entire FOMC range of 2.4-2.9%, although we had been tracking closer to that 2.9% prior to today’s PPI release. 
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  • Unrounded core PCE estimates have been revised down from ~0.20% M/M post-CPI to somewhere in the region of 0.13-0.14% M/M after today’s PPI report.
  • Core PCE estimates: Barclays (0.11), MS (0.11), GS (0.13), Nomura (0.13), BofA (0.14), UBS (0.15) and Citi (0.18).
  • That would mark a sizeable moderation after two months averaging 0.27% M/M, although despite that it still leaves a very good chance that core PCE inflation will overshoot the previous FOMC forecast for Q4 2024. It comes as the committee looks to refresh its SEP at next week’s meeting.
  • As a purely indicative scenario, a 0.13-0.14% M/M increase in Nov before 0.2% M/M in Dec (simply based on six-month average to Oct) would see average core PCE inflation of 2.8% Y/Y in Q4.
  • That’s versus the 2.6% the median FOMC member projected back in the September SEP (having reversed its prior upward revision to 2.8% back in June).
  • It also leaves a trajectory potentially close to those from the most hawkish members of the FOMC, with an entire FOMC range of 2.4-2.9%, although we had been tracking closer to that 2.9% prior to today’s PPI release.