Core PCE stays sticky
The Fed’s preferred inflation gauge—core PCE—remained elevated (around 3.1% year‑over‑year) even as headline CPI eased to 2.4% in February, signaling services inflation is still a problem, reported March 13. That divergence helps explain why markets and analysts expect the Fed to stay on hold for now.
The Bureau of Economic Analysis’ Personal Income and Outlays release on March 13, 2026 showed headline PCE rose 0.3% month‑over‑month in January, core PCE increased 0.4% m/m, and nominal consumer spending rose 0.4% that month. (bea.gov) Analyst breakdowns pointed to services as the main source of underlying firmness — Oxford Economics flagged higher physician‑services and portfolio‑management fees as drivers, while KPMG noted a 3.1% surge in personal computer prices even as energy goods fell 1.7%, which trimmed the headline read. (oxfordeconomics.com) Market pricing left little doubt about near‑term Fed action: CME‑style Fed‑watch measures showed mid‑90s to ~99% odds the Fed would hold at its March meeting, while the 2‑year Treasury traded near about 3.73% and the 10‑year touched roughly 4.28% on March 13 as traders digested the report. (fedwatch.com) Federal‑reserve commentary and macro data added to the dilemma — Richmond Fed President Tom Barkin warned in early March that “sticky” inflation plus stronger jobs data could shift the Fed’s risk assessment, and the first estimate of Q4 GDP was revised down to 0.7% on March 13, complicating the timing of any future cuts. (money.usnews.com)
