May PCE data sets the stage for the next hawks versus doves debate - Deutsche Bank

FXStreet (Łódź) - Jim Reid from Deutsche Bank reminds that the Fed has said on numerous occasions that its preferred inflation measure is the core PCE deflator so for the Fed this is likely more important than the backward Q1 GDP growth number.

Key quotes

"For the record, Bloomberg consensus is expecting the headline PCE deflator to be 1.8% yoy, or about 20bp above April’s 1.6% yoy."

"Meanwhile the core PCE deflator is expected to print at 1.5% yoy, about 50bp below May’s core CPI of 2.0% yoy (released a week and a half ago)."

"A 1.5% yoy print in core PCE would be seen as relatively benign being only about 10bp above last month’s reading, but anything substantially above that would prompt another resurgence of questions about the path of Fed policy."