PRIMER - US PCE Inflation data is due at 13:30BST/08:30EDT

The consensus looks for PCE headline prices to rise +0.5% M/M in April (prev. 0.7%),with the annual rate seen rising to 3.8% Y/Y (from 3.5%); core PCE is expected to rise by 0.3% M/M (prev. 0.3%), and to 3.3% Y/Y (prev. 3.2%).
Following hotter than expected CPI and PPI reports, analystsʼ updated econometric models point to April core PCE inflation of between +0.3-0.4% M/M (prev. +0.3%). Oxford Economicsʼ PCE nowcast looks for the hottest readings since 2022, with headline PCE seen rising to 3.8% Y/Y (prev. 3.5%) and core to 3.3% (rev. 3.2%). It notes CPI and PPI inputs imply firmer core goods, notably software prices linked to AI infrastructure demand, though the monthly PCE print should be softer than CPI and PPI given energyʼs lower weighting.
On policy, a firmer PCE print would likely reinforce the higher for longer narrative, and could strengthen arguments for renewed rate hikes. While no FOMC official has yet explicitly called for rates to rise, the April meeting minutes showed a majority would support hikes if inflation remains above target, with Middle East tensions, higher energy prices, AI-driven demand and resilient labour markets cited. The April meeting also showed concern among some policymakers about maintaining an easing bias in this environment.