US PCE Inflation Holds at 3.7% as Fed Rate Decision Looms

The Federal Reserve's preferred inflation gauge showed persistent price pressures in July, with the Personal Consumption Expenditures Price Index rising 0.2 percent from June and 3.7 percent year-over-year, according to data released Wednesday by the Commerce Department. The figures, which came in slightly above economists' expectations, reinforce concerns about stubborn inflation ahead of the central bank's September interest rate decision.

The annual PCE inflation rate held steady at 3.7 percent, unchanged from June and above the forecast of 3.6 percent. Core PCE, which excludes volatile food and energy prices, also rose 0.2 percent for the month and remained at 3.3 percent annually, matching expectations. The data arrives as the Fed weighs whether to raise interest rates from the current 3.50 to 3.75 percent range, where it has been held since December.

Energy costs have been a significant driver of inflation, linked to the ongoing Middle East conflict. However, benchmark oil prices fell below $90 per barrel this week amid optimism about diplomatic efforts to restore shipping through the Strait of Hormuz. The report noted that the unrounded core PCE was 0.246 percent, nearly...