US August Core PCE Misses Forecast, Cooling Bets on a Fed Rate Hike in October

News Editor

2026-09-30 13:24:02

U.S. inflation data for August came in softer than expected, prompting traders to scale back bets on a Federal Reserve rate hike in October. According to BlockBeats, core PCE, the Fed’s preferred inflation gauge excluding food and energy, rose 3% year over year, the lowest reading since February and below the 3.3% market forecast. The prior reading was revised down from 3.3% to 3%. On a monthly basis, core PCE increased 0.2%, also below the expected 0.3%. Headline PCE rose 3.4% year over year and 0.3% month over month, both under expectations. At the same time, personal spending increased 0.9% from the previous month, beating the 0.8% estimate, while inflation-adjusted real personal spending rose 0.6%, marking the largest monthly gain since March 2025. After the release, U.S. short-term rate futures moved higher, traders reduced expectations for an October hike, and CME FedWatch showed a 52.9% probability that rates would remain unchanged. The U.S. 2-year Treasury yield fell more than 5 basis points to 4.843%, while spot gold rose more than $20 and moved above $4,210.

U.S. August inflation data came in below market expectations, and traders trimmed bets that the Federal Reserve will raise rates in October.

According to BlockBeats on Sept. 30, core personal consumption expenditures, or core PCE, rose 3% year over year in August. That was the lowest level since February, below the 3.3% market forecast, and lower than the prior reading, which was revised from 3.3% to 3%. On a month-over-month basis, core PCE increased 0.2%, also below the expected 0.3%.

Headline PCE and spending data were released at the same time

Headline PCE rose 3.4% year over year and 0.3% month over month, with both readings below expectations. In the same release, U.S. personal spending increased 0.9% from the previous month, above the 0.8% forecast. Real personal spending, adjusted for inflation, rose 0.6%, the largest monthly increase since March 2025.

Markets cut back October hike expectations

BlockBeats said softer inflation and resilient consumer spending appeared at the same time, making the Fed’s next policy decision harder to read. After the data was published, U.S. short-term rate futures moved higher and traders reduced bets on a Fed rate hike in October. CME FedWatch showed the probability of rates staying unchanged in October at 52.9%.

The yield on the U.S. 2-year Treasury fell more than 5 basis points in short-term trading to 4.843%. Spot gold rose more than $20 and climbed above $4,210.

BEA changed part of the PCE calculation method

The Bureau of Economic Analysis, or BEA, also adjusted the calculation method for some PCE components in this release. It is not yet clear how much those revisions affected the final data.

This article was originally published by Bit.Fan. For more cryptocurrency news and market insights, visit www.bit.fan.

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