Global Macro Chart of the Day "(#131): Fed help is on the way, but is it..."

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Global Macro Chart of the Day "(#131): Fed help is on the way, but is it..."

Global Research

24 July 2026ab

Global Macro Chart of the Day Economics

Global(#131): Fed help is on the way, but is it enough?

Arend Kapteyn

Economist

Core PCE likely to be 20bp lower in H2-26 than the FOMC expected in June arend.kapteyn@ubs.com

+44-20-7567 0531

As we flagged in our June 29 Chart of the Day, and Alan Detmeister's more detailed

write-up, the Bureau of Economic Analysis (BEA) is making changes to the national

accounts that will affect some of the largest contributors to PCE inflation. The revisions

will be released on September 30, after the September 16 FOMC meeting. As a result,

policymakers will go through two more meetings before the revised data become

available. Importantly, the BEA will revise the past five years of data, shifting the entire

year-over-year core PCE inflation profile around 20bp lower in the second half of 2026.

The revisions could matter for a Fed chair who pays close attention to what sits to the left

of the decimal point. On the revised data, unrounded core PCE inflation falls below 3%

by December (see chart). Combined with the softer-than-expected June CPI print, an

earlier return below 3% and a lower inflation peak may provide enough reassurance on

the inflation front to keep the FOMC on hold. Against that, however, the re-escalation of

tensions in the Middle East and the resulting rise in energy prices may lead policymakers

to focus more on inflation risks than on statistical revisions.

As Jonathan Pingle notes in the US Weekly, FOMC participants favouring further

tightening may hold their views more strongly than those advocating patience.

Consequently, while the June dot plot appeared finely balanced and we think among