Fed's favored inflation gauge accelerated in May amid energy price shock

May PCE inflation rose higher, reinforcing concerns that the Federal Reserve's preferred price gauge remains elevated amid the energy shock from the Iran war. The combination of hotter inflation and geopolitical energy disruption is modestly negative for risk assets and could keep policy expectations hawkish.

Analysis

May PCE inflation rose higher, reinforcing concerns that the Federal Reserve's preferred price gauge remains elevated amid the energy shock from the Iran war. The combination of hotter inflation and geopolitical energy disruption is modestly negative for risk assets and could keep policy expectations hawkish.