Truflation has called for the Federal Reserve to cut interest rates after its July forecast closely matched the official PCE readings. Headline PCE rose 0.2% monthly and remained at 3.7% annually. Truflation’s data suggests a need for a rate cut due to weaker spending, lower gasoline prices, and mixed labor data. Fed officials are concerned about inflation as services, wages, and tariffs continue to pressure prices. Truflation’s data suggests a turning point that requires a rate cut, with softer household demand and declining gasoline prices supporting this argument. The BEA reported that inflation-adjusted personal consumption expenditures were almost unchanged in July, with retail sales falling 0.6% and unemployment at 4.1%. Truflation uses its TruPCE measure to track government indexes and provides earlier guidance based on its data from over 15 million product prices. The company’s July model showed housing as the largest weight, with services and groceries contributing the most to inflation. Wage growth, tariffs, oil prices, and electricity demand present risks to the argument for a rate cut. Fed officials have been cautious about cutting rates, with some expressing concerns about persistent inflation. Truflation’s call for a rate cut contrasts with the Federal Reserve’s current stance, with some officials suggesting that rates could fall over time if inflation returns to the central bank’s target. Bitcoin showed little reaction to the PCE release, trading around $78,353 after the announcement. Fed Chair Kevin Warsh’s upcoming speech at Jackson Hole is expected to provide further guidance on interest-rate decisions.
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