How the Fed Reads the Core PCE Puzzle

On this episode of The Federal Reserve Podcast, Lucas and Luna dig into the gap between the CPI and the Fed's preferred inflation gauge, the core PCE price index. With CPI ticking up in July but core PCE cooling in the latest reading, the hosts explain why the Fed leans on PCE, how the weights differ, and what the 10-year breakeven rate—now at 2.27 percent—says about market expectations. They walk through the Fed's internal debate: is the recent CPI pop a signal or noise? And they discuss why the Fed might not react to one month of data, even as some officials push for a more hawkish stance. Along the way, they touch on the policy rate at 3.63 percent, the interest on reserve balances at 3.65 percent, and what all this means for the path of rate cuts. A clear, focused explanation for anyone who wants to understand the Fed's thinking beyond the headlines. #FederalReserve #MonetaryPolicy #CorePCE #CPI #Inflation #InterestRates #FOMC #BreakevenRate #RealRate #FedFundsRate #EconomicData #CentralBanking #Economics #Markets #Policy #FexingoBusiness #BusinessPodcast #Macroeconomics Keep every episode free: buymeacoffee.com/fexingo