Key Facts
• The Federal Reserve’s preferred inflation gauge, the core PCE price index, is forecasted to rise by 0.1% in May.
• The Federal Open Market Committee (FOMC) kept the key policy rate unchanged during its June 17-18 meeting.
• Federal Reserve Chair Jerome Powell will testify on monetary policy before Congress on June 24 and 25.
• Economists predict the core PCE index’s three-month trend is the calmest since the COVID-19 pandemic began five years ago.
• U.S. financial authorities expect tariffs from the Trump administration to increase inflationary pressures later this year.
• Disposable income adjusted for inflation grew by an average of 0.6% over the past three months, the highest in over two years.
• The next FOMC meeting is scheduled for July 30, with potential for a rate cut.
• Consumer spending is expected to show modest growth for the second consecutive month in May.
• Oil prices are projected to surge following U.S. military actions against Iran, potentially reaching $90 per barrel if the Strait of Hormuz is blocked.
Summary
The Federal Reserve’s core PCE price index, a key inflation measure, is expected to show a modest 0.1% increase in May, reflecting the calmest trend since the pandemic began. Chair Jerome Powell will testify before Congress on June 24-25, emphasizing cautious monetary policy amid uncertainties from U.S. trade policies. The FOMC recently held interest rates steady, with a potential rate cut on the table for July. Economists highlight steady consumer spending and rising disposable income, though concerns over tariffs and economic slowdown persist. Meanwhile, geopolitical tensions with Iran could drive oil prices to $90 per barrel, impacting global markets.
