Latest / The Macro Memo with Fexingo: Daily Conversations on Inflation, GDP, and Federal Reserve Policy
Why Core PCE Is Sticky While CPI Cools
Headline CPI fell in June, but the Fed's preferred inflation gauge—the core PCE index—actually rose to 130.1 from 129.67, an annualized pace near 4 percent. Lucas and Luna unpack the growing divergence between the two measures, explain why housing and health-insurance costs are keeping services inflation stubborn, and examine why the Fed is holding rates at 3.63 percent despite bond-market signals that future inflation will ease. They also connect the dots to the ultra-low 187,000 jobless claims and what it all means for the next policy move.
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The skinny
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