In the latest economic update, fresh inflation data released on Friday revealed a subtle yet significant shift. The Commerce Department's personal consumption expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, rose by just 0.1% last month. This modest increase aligns with expectations, placing the annual inflation rate for the 12 months through June at a mere 2.5%—the smallest year-over-year gain in four months. But what does this mean for the economy and the Federal Reserve's ongoing efforts?
The United States economy has defied expectations, posting a robust growth rate of 2.8% in the second quarter, according to recent data from the US Commerce Department. This unexpected surge not only surpasses the average estimate of 2% from economists polled by Reuters but also doubles the 1.4% growth seen in the first quarter. But that's not all—the inflation rate, as measured by the personal consumption expenditures (PCE) Price Index, has also shown a promising decline, rising by only 2.9% compared to the previous quarter's 3.7%. What does this mean for the economy and the Federal Reserve's upcoming policy meeting?