PCE shows steady July inflation, boosting bets on September rate cut

The Federal Reserve's preferred inflation gauge showed price pressures largely steady in July, a development that could strengthen expectations for an interest rate cut at the central bank's September meeting. The Commerce Department's Bureau of Economic Analysis reported Friday that the personal consumption expenditures price index rose 0.2 percent from June and was unchanged at 2.6 percent on a year over year basis, in line with economists polled by LSEG. Core PCE, which excludes volatile food and energy costs, climbed 0.3 percent for the month and 2.9 percent from a year earlier.

The report arrived as Fed Chair Jerome Powell has signaled a likely resumption of rate cuts at the Sept. 17 meeting following his dovish remarks at the annual Jackson Hole symposium. Powell's comments have pushed the S&P 500 toward record highs, even as markets showed only modest immediate movement after the July inflation figures were released. S&P futures pared losses but remained slightly lower early Friday, while futures tied to the Dow and Nasdaq also slipped; heavyweight chipmaker Nvidia trimmed recent gains after a fourth quarter earnings dip.

Analysts and market participants offered differing...