U.S. Core PCE Holds at 2.9% in August, Matches Forecasts.

U.S. Core PCE Climbs 2.9% in August, Matching Forecasts.

U.S. underlying inflation held steady in August, reinforcing the Federal Reserve’s cautious stance on rate policy. The core personal consumption expenditures (PCE) price index—excluding food and energy—rose 2.9% year-over-year, unchanged from July and in line with forecasts, according to the Commerce Department’s Bureau of Economic Analysis. Every month, core PCE advanced 0.2%, also matching prior readings and expectations.

Headline PCE inflation climbed 2.7% annually and 0.3% monthly, slightly higher than July but consistent with projections. The Fed, which targets 2% inflation, faces the challenge of tackling persistent price pressures while addressing signs of a cooling labor market. Earlier this month, the central bank cut rates by 25 basis points and hinted at possible additional easing in October and December, though Chair Jerome Powell cautioned that no rate path is without risks.

Meanwhile, U.S. consumer spending rose 0.6% in August, up from 0.5% in July, underscoring continued economic resilience. Combined with stronger GDP revisions and lower jobless claims, the data suggests robust momentum in household demand despite ongoing inflationary concerns.