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Why Core PCE Sticky at 3.3 Percent Matters for Rate Cuts
The Fed's preferred inflation gauge — core PCE — came in at 3.3% annualized in April, exactly as expected. But in this episode of The Macro Memo, Lucas and Luna explain why that 'as expected' number is actually a problem. They break down the double scar of consumer trauma from the Iran war and past inflation spikes, using fresh data on energy persistence from Fed's Goolsbee and the labor market's surprising resilience. They connect the dots between sticky services inflation, the Fed's current 3.65% interest on reserve balances rate, and the central bank's…
The skinny
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