US PCE core inflation likely increased by 0.2% m/m in February – Danske Bank

Research Team at Danske Bank suggests that US PCE core inflation for February is due for release today and while headline inflation has been increasing rapidly and is almost at the Fed's 2% target, PCE core inflation has remained stuck around 1.7%.

Key Quotes

“We expect the development of PCE core inflation to attract special interest in coming months given the comments at the last FOMC meeting that the Fed has a 'symmetric inflation target', which could be interpreted as the Fed will be willing to let inflation slightly overshoot the 2% target. Hence, it implies a more dovish tone. However, we will have to see whether it actually means it. Last time PCE inflation was at 2% was at the beginning of 2012. We estimate the PCE core increased 0.2% m/m, implying 1.7% y/y. Thus, we expect core inflation to remain at the same level it has stayed at since August 2016.”