PCE price index

Federal Reserve Chair Kevin Warsh highlighted confusion over inflation measurement methods during a press conference following a contentious 9-3 vote to keep interest rates steady in July 2026. The Fed's preferred inflation gauge showed a June 2026 rate of 3.7%, above its 2% target, while alternative metrics like the Dallas Fed's 2.2% and Atlanta Fed's 'sticky' (2.8%) and 'flexible' (5.1%) readings further complicate assessments.

Inflation in the U.S. decreased to 3.7% in June as the PCE price index annual rate declined from 4.1% in May, primarily due to falling energy prices linked to a short-lived ceasefire in Iran.

The U.S. economy grew at a 1.5% annual rate in Q2 2026, below expectations and down from 2.1% in Q1. Inflation, as measured by the Fed's preferred PCE index, remained above the 2% target at 3.7% year-over-year in June 2026, though it slowed from 4.1% in May. The Federal Reserve held interest rates steady for the fifth consecutive meeting, despite dissent from three regional presidents advocating for higher rates.

Inflation, as measured by the PCE price index, hit 4.1%, its highest level since 2023. Consumer spending remained stable despite the rise in inflation.

Asian stocks were mixed with Japan and South Korea rising amid AI-driven gains, while U.S. futures fell and oil prices dropped due to optimism over U.S.-Iran negotiations. Progress in talks reduced tension around the Strait of Hormuz, though risks of conflict remain. The U.S. PCE inflation data is set for release later this week.

Core inflation in April reached 3.3% annually, aligning with expectations, while the broader PCE price index showed 3.8% inflation for all items. The Federal Reserve's preferred inflation metric, the PCE index, confirmed these figures.