Markets took a hit on February 28, 2025. The latest PCE inflation report 2025 dropped Friday morning, showing hotter-than-expected numbers—core PCE rose 2.6% year-over-year, above the Fed’s 2% target. Stocks dipped, and traders slashed bets on 2025 rate cuts. This USA economic news bombshell has Wall Street buzzing—is the Fed stuck? Here’s what’s up.
What Did the PCE Report Reveal?
The numbers stung. The Personal Consumption Expenditures (PCE) index—a key Fed gauge—climbed 0.3% month-over-month, pushing the annual rate to 2.5%. Core PCE, stripping out food and energy, hit 2.6%, up from December’s 2.8% but still too high. Economists hoped for 2.4%, per FactSet. Fed Chair Jerome Powell’s dream of “2% or bust” looks shaky—Fed rate cuts 2025 are on thin ice.
Key stats
- Headline PCE: 2.5% YoY, from 2.6%.
- Core PCE: 2.6% YoY, hotter than expected.
- Reaction: S&P 500 futures fell 0.4% pre-market.
X traders flipped—one posted, “PCE kills rate cut hopes!”
Why Are Markets Freaking Out?
It’s a gut punch. Inflation report reaction was swift—bond yields spiked, with 10-year Treasuries jumping 8 basis points. The Fed’s December call for two 2025 cuts now wobbles as inflation lingers. Trump’s tariffs loom large—Evercore ISI warns they could nudge PCE to 2.8% by year-end. Stock market shock hit tech hard—Nvidia slipped despite its earnings win.
How Does This Change Fed Plans?
Rate cuts? Maybe not. Federal Reserve policy faces a wall—January’s CPI already burned hopes, and now PCE seals it. Chicago Fed’s Austan Goolsbee said Thursday, “It’s not as sobering as CPI,” but markets disagree. Futures now see one cut—maybe—in December, per CME FedWatch. USA economic news screams caution—Powell’s “data-driven” mantra holds firm.
What’s shifting
- Rates: Stuck at 4.25%-4.5% for now.
- Risk: Tariffs could heat inflation more.
- Next: March 19 meeting looms large.
What’s Ahead for Investors?
Nerves are frayed. PCE inflation impact means higher borrowing costs linger—goodbye, cheap money. X users debate—one asked, “Rate hikes next?” Another shrugged, “Fed’s lost.” Will this stock market shock fade, or deepen? Fed rate cuts 2025 hang in the balance.
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