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Macro Since March FOMC - Inflation: Core PCE Also Surprises Hotter [2/3]

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  • Quarterly core PCE data helped push implied Fed rates higher still as it came in stronger than analysts expected in Q1 even if it was broadly in line with the estimate Powell had indicated in the mid-April discussion with BoC’s Macklem.
  • Some of that upside surprise was subsequently mellowed by Friday's monthly release which showed about half of it, relative to analyst expectations, had come back in January.
  • Nevertheless, core PCE still accelerated to 4.4% annualized on a three-month basis and held at 3.0% annualized over six months.
  • That left both rates stronger than the Y/Y rate of 2.8% for a second month, further proof of momentum moving in the wrong direction for the Fed and something Powell pointed out after one month of divergence.
  • Further, supercore PCE inflation may have had a particularly large wedge with its CPI counterpart in recent months but it nevertheless stood at 5.5% annualized over the three months to February and 3.8% annualized over six months.

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  • Quarterly core PCE data helped push implied Fed rates higher still as it came in stronger than analysts expected in Q1 even if it was broadly in line with the estimate Powell had indicated in the mid-April discussion with BoC’s Macklem.
  • Some of that upside surprise was subsequently mellowed by Friday's monthly release which showed about half of it, relative to analyst expectations, had come back in January.
  • Nevertheless, core PCE still accelerated to 4.4% annualized on a three-month basis and held at 3.0% annualized over six months.
  • That left both rates stronger than the Y/Y rate of 2.8% for a second month, further proof of momentum moving in the wrong direction for the Fed and something Powell pointed out after one month of divergence.
  • Further, supercore PCE inflation may have had a particularly large wedge with its CPI counterpart in recent months but it nevertheless stood at 5.5% annualized over the three months to February and 3.8% annualized over six months.