It was first introduced by the Bureau of Economic Analysis of the U.S. Department of Commerce and adopted in 2002 by the Federal Open Market Committee, the decision-making body of the Federal Reserve, as a major indicator of inflation.

Introduction

The core PCE price index was first launched by the Bureau of Economic Analysis of the U.S. Department of Commerce and was adopted by the Federal Open Market Committee (FOMC), the decision-making body of the Federal Reserve, as a major indicator of inflation in 2002. PCE is the abbreviation for Personal Consumption Expenditures Deflator (CTPIPCE).

Unlike the Consumer Price Index (CPI) which is based on a fixed basket of goods, the Personal Consumption Expenditure (PCE) deflator is used to find the average increase in the price of all domestic personal consumer goods and can reflect the price changes that cause consumers to purchase substitute products. s price. PCE deflation is considered to be a more comprehensive and stable measure of U.S. inflation and has attracted the attention of the Federal Reserve.

Long and short impact

The United States generally uses CPI as an indicator to observe price changes; however, when the Federal Reserve reports to the Senate and the House of Representatives every six months, it will use the growth rate of the core PCE price index as an indicator of price changes. The latter is formulated and formulated by the Federal Reserve. An important basis for implementing monetary policy. Therefore, data is very important and often has a greater impact on the market.

If the data is higher than expected, it will be bullish for the dollar, and if the data is lower than expected, it will be bearish for the dollar.

Recent data

At 20:30 Beijing time on Friday (April 27), the United States announced that the initial annual value of the core PCE price index in the first quarter was 1.8%, compared with the previous value of 1.7%. After the data was released, gold and the US dollar fluctuated widely.

Previously, according to a Reuters survey of analysts, factors such as companies slowing down investment in equipment, trade deficit and declining housing construction investment may inhibit U.S. economic growth in the first quarter. These factors may have offset the rise in business inventories.

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Although the economic growth rate in the first quarter has slowed down compared with before, the market is quite optimistic about the trend of the U.S. economy in the next few quarters. As tax cuts and other fiscal stimulus are gradually rolled out, demand is expected to stabilize and the U.S. economy will expand by the second largest amount on record in May. At the same time, the U.S. unemployment rate is at its lowest since 2000, fiscal conditions are healthier, and inflation and borrowing costs are low.