Fed's Preferred Inflation Gauge PCE Slightly Above Expectations, Core PCE "Sticky," September Rate Hike Uncertainty Makes Waller's Friday Speech the Focus

Data released Wednesday, including PCE, showed U.S. underlying inflation was relatively moderate, actual consumption was weak, but economic activity remained resilient. After the PCE release, futures markets priced the probability of a September rate hike at slightly above 40%. Media noted U.S. inflation remained stubborn in July, and it is still unclear how Waller views inflation. The "new Fed whisperer" published an article titled "Fed Chair to Head to Jackson Hole, Inflation Stance Unclear," and relayed Boston Fed President's view that if inflation does not show sustained improvement, a rate hike "soon" would be appropriate.