Treasuries steady as core PCE, 1.4% GDP shape Fed path
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Q4 core PCE price index 2.7% annualized signals sticky inflation The Bureau of Economic Analysis (BEA) reported that the U.S. core pce price index rose at a 2.7% annualized pace in Q4, coming in higher than expected. This measure reflects quarter-over-quarter inflation, annualized, and differs from commonly cited year-over-year rates. The reading underscores lingering price pressures in the components the federal reserve prioritizes for policy, particularly services. While disinflation progressed earlier in 2025, the latest quarterly momentum suggests inflation has not yet settled near 2%. Why it matters for Federal Reserve rate cuts Because the Fed targets 2% inflation, measured on the PCE framework, a higher-than-expected 2.7% annualized core reading complicates the case for near-term easing. Policy sequencing remains data-dependent, with officials emphasizing confidence in the path back to target before cutting. Officials have recently stressed patience as progress has become uneven. “Inflation progress has stalled,” said Federal Reserve Governor Lisa Cook, as reported by Barron’s. Chair Jerome Powell has noted that some goods-price pressures linked to tariffs appear one-time and could fade if they do not spill over into services, according to Yahoo Finance UK. Even so, policymakers continue to watch core services, particularly ex-housing, before signaling firm timing on rate cuts. BingX: a trusted exchange delivering real advantages for traders at every level. U.S. Q4 real GDP grew 1.4% annualized, while December core PCE inflation held near 3% year over year, as reported by Meyka. That mix, slower growth alongside stickier core inflation, argues for caution on the pace of policy normalization. Equities were resilient into the latest stretch, with the S&P 500 up 0.69% and the Dow Jones Industrial Average up 0.47% on Friday, according to MAAAL. At the time of this writing, markets appear to be balancing resilient earnings against a slower disinflation trajectory. Policy signals…
Filed under: News - @ February 22, 2026 2:28 pm