Core PCE Gives No Reason for a Rate Hike
Core PCE is still elevated, but the latest details do not point to a rate hike. Inflation is not fully defeated, yet growth is not the problem: the private sector is showing more resilience than the pessimists assume.
The supporting data matters. Core PCE is running at 3.3%, July income rose 0.4% against a 0.2% estimate, and spending increased 0.2%. Durable-goods orders rose 1.1%, more than double expectations, while second-quarter consumption was revised up to 3.4%.
That mix describes an economy that is absorbing higher prices without collapsing under them. The policy question is not whether inflation deserves attentionit doesbut whether the data justify adding another restraint to an economy whose private engine is still delivering.
The better base case is to control spending, keep money sound, and allow supply and productivity to do their work. A strong private sector gives the Fed room to wait rather than hike simply because inflation remains above target.
