Federal Reserve policymakers have revised their projections for end-2024 PCE and core PCE inflation. Forecasts show an increase in core PCE to 2.8% from 2.6% in March, with expectations for core PCE to moderate further. Analysts are considering base effects and the impact on inflation rates, with some suggesting that the current pace of declining OER may lead to an undershoot in inflation targets. Various financial institutions, including Bank of America and Goldman Sachs, are providing forecasts and estimates for core PCE inflation, with expectations ranging from 0.12% to 0.19% month-over-month increases. The latest data suggests that core PCE may need to average around 0.19% monthly to align with the Fed's forecast of 2.8% for Q4.
GS: Following this morningโs import price data, we left our May core and headline PCE estimates unchanged at +0.13% and +0.03%, respectively, corresponding to year-over-year rates of 2.59% and 2.51%, respectively. https://t.co/cz7w1IfIWI
โ.. Our core [PCE] estimate is 0.148% on the month .. Should the data arrive near our forecast this will affirm our notion that the turn of the year inflation was noise ..โ @joebrusuelas #PCE ๐บ๐ธ https://t.co/QbQjOFUoW1
BofA: Assuming that our forecast for May is correct, Core PCE would need to average prints of 0.19% m/m to end the year in line with the Fedโs latest forecast of 2.8% q4/q4 https://t.co/XFO5DE567A
BofA: May PCE inflation tracking: An A+ report Given todayโs PPI report and yesterdayโs CPI data, we expect core PCE to increase by 0.2% m/m (0.16% ungrounded). This would be in line with the Fedโs 2% target after a string of hotter inflation data to start the year https://t.co/PBwY3N0NEu
The CPI and PPI data mean core PCE likely rose only 0.11% in May, well below the 0.19% average for May-Dec implied by the Fed's new forecasts. y/y core PCE should be just 2.6% in May, down from 4.7% in May last year. No wonder markets don't believe the new dotplot
Analysts were calling for core PCE to print 0.12% m/m / 2.6% y/y... lets see if their models for the PCE (due 28 June) run rate are taken lower due to the PPI print. Recall, the Fed are at 2.8% core PCE for Q4, so maybe too few revised their estimates in the SEP. https://t.co/2Rf8ym9r7L
We expect Core PCE moderate further in March. Based on the data we have in hand, we expect May core PCE inflation to print at 0.14% to 0.16% m/m. BofA https://t.co/JQlTRj0Nzl
BofA: We expect Core PCE moderate further in March. Based on the data we have in hand, we expect May core PCE inflation to print at 0.14% to 0.16% m/m. https://t.co/iG3LCioU9n
Powell mentioned "conservatism" due to PCE base effect. Core PCE avg was just under 0.16% Jun-Dec last year. Last May had higher base of 0.29% M/M. Core PCE is prob below 0.15% in May so PCE Y/Y will fall to ~ 2.6%. Jun-Dec avg need to be < 0.16% M/M for PCE Y/Y to fall more. https://t.co/c7HA8naVmQ
Fed hiked 2024 year end core PCE exp to 2.8% YoY from 2.6% in March. At the current pace of declining OER (to catch down to true rents), Fed will undershoot this by 0.2% or more. https://t.co/VnmbkvmA0m
Forecasts show 2025 PCE and core PCE inflation at 2.3% versus 2.2% in March. Fed policymakers see end-2024 PCE inflation at 2.6% versus 2.4% in the March projection, core seen at 2.8% versus 2.6%. https://t.co/PSccQzv6ru
FED SEP Core PCE revised up to 2.8% for end 2024. The commentators who are surprised by this don't understand base effects. Exit 2.8% Core PCE implies a .175% month-over-month gain from here to year end. Still too low. Exit 3% more realistic.