US PCE price index
The Fed’s preferred measure of inflation.
The basics
Like CPI, the PCE index measures how fast prices are rising, but it covers more spending, including what is paid on people’s behalf, such as health care.
The Federal Reserve’s 2% inflation target is set on this index, so a surprise here speaks directly to the Fed.
How to read the result
- Above the forecast
- Inflation above the forecast often lifts the US dollar and weighs on shares and gold.
- Below the forecast
- Inflation below the forecast often weakens the US dollar and can support shares.
Going deeper
Because CPI and PPI come out earlier in the month, economists can estimate PCE closely; surprises are usually small. The same release has personal income and spending.
FAQs
- Why can the price move the “wrong” way?
- Prices already reflect the forecast, so markets react to the surprise, not the number itself. Other parts of the same release, revisions to earlier months or other news in the same hour can outweigh the headline figure, and a first move often reverses within the hour.
- Should I close my trade before the release?
- That is your decision; this page does not give advice. What is certain is that prices can jump in seconds around big releases, spreads widen, and a stop loss can close at a worse price than the one you set. Many traders check their position size and stop before the release.