Why the Fed Watches Core PCE More Than CPI

In June 2026, headline CPI fell to 332.6 from 333.98, a rare decline that grabbed headlines. But the Fed's preferred inflation gauge, the PCE price index, actually rose to 131.5 from 130.94, and core PCE ticked up to 130.1. So which number matters more? In this episode, Lucas and Luna break down the structural differences between CPI and PCE—scope, weighting, and formula effects—and explain why the Federal Reserve has anchored its 2% target to core PCE since 2012. They also examine the labor market context, with initial jobless claims dropping to 187,000, and discuss how Fed watchers like Kevin Warsh are parsing the central bank's latest language. If you've ever been confused by conflicting inflation headlines, this episode gives you the framework to read between the numbers. #CPI #PCE #FederalReserve #Inflation #CorePCE #EconomicIndicators #KevinWarsh #LaborMarket #JoblessClaims #MonetaryPolicy #Economics #GDP #ConsumerSpending #FexingoBusiness #BusinessPodcast #MacroData #FedWatch #InflationTarget Keep every episode free: buymeacoffee.com/fexingo