Diane Swonk, KPMG’s chief economist, forecasts a significant increase in the Personal Consumption Expenditures (PCE) price index, particularly in services inflation, following the latest Consumer Price Index report. She believes the data could prompt the Federal Reserve to consider a half-point interest rate hike. The latest CPI data rose 0.4% month over month, heightening attention on the upcoming PCE report, the Fed’s preferred inflation gauge. Market pricing now implies a greater chance of at least one rate hike in 2026, while investors will closely monitor comments from Fed Chair Jerome Powell and other officials for clues about future monetary policy.
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