PCE Report in Focus as Markets Brace for Fed’s Preferred Inflation Gauge

August 29, 2025 (New York) - Investors and policymakers turned their attention to today’s release of the U.S. Bureau of Economic Analysis’s Personal Consumption Expenditures (PCE) report, the Federal Reserve’s favored measure of inflation.

This morning, economists surveyed by Dow Jones projected that the headline PCE price index rose by 0.2 percent month-on-month in July and by 2.6 percent year-over-year, matching June’s annual increase. Core PCE, which strips out volatile food and energy prices, is expected to have advanced 0.3 percent on the month and 2.9 percent over the past year, up from 2.8 percent in June. Personal spending was forecast to have climbed 0.5 percent in July, accelerating from a 0.3 percent gain the previous month.

Equity futures opened lower as traders weighed the potential implications for the Fed’s policy path. Dow Jones Industrial Average futures dipped 0.28 percent, S&P 500 futures eased 0.24 percent, and Nasdaq-100 futures slid 0.43 percent. Market participants have largely priced in a quarter-point rate cut at the central bank’s September 16-17 meeting, but a hotter-than-expected PCE reading could prompt policymakers to reconsider easing monetary policy.

The PCE report, released at 8:30 a.m. EDT, is the last critical inflation snapshot before the Fed’s September gathering. A cooler reading would reinforce expectations of a rate cut aimed at supporting a slowing labor market, while persistent inflation could delay any easing move.