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Against the backdrop of a Federal Reserve policy cycle where inflation data carries direct weight for the rate path, the central bank's preferred price gauge landed softer than expected in July.
The personal consumption expenditures price index recorded core prices rising 3.3% on a 12-month basis, against a consensus of 3.6% that economists surveyed by Dow Jones had projected.
What the undershoot means for the rate path The personal consumption expenditures price index is the Federal Reserve's own preferred inflation measure, and its annual reading is the figure rate-sensitive markets track most closely.
The 12-month number captures the sustained price trend policymakers are working to address rather than a single month's movement, which is why it anchors the rate-path discussion more than the monthly figure does.
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