Analysis: US core PCE inflation picks up in June, adding uncertainty to the Fed's September rate cut outlook

June US inflation data slightly exceeded expectations, adding further uncertainty to the Federal Reserve's timetable for rate cuts. The Fed's preferred core PCE price index rose 0.3% month-over-month and 2.8% year-over-year, slightly exceeding market forecasts of 0.29% and 2.7%. The overall PCE index, which includes food and energy, rose 0.3% month-over-month and 2.6% year-over-year, also exceeding market expectations of 0.23% and 2.5%. This unexpectedly strong inflation report further complicates the Fed's path toward rate cuts. Policymakers have previously emphasized the need for further evidence of a sustained decline in inflation toward their 2% target, and the latest data could slow that progress.