US DATA: FOMC Can See End-2024 Core PCE Forecast With 0.2% M/M Clips

* Core PCE inflation of 0.08% M/M in May is the first reading of the year that
is consistent with inflation at or below the 2% inflation target.
* It helps leave inflation on a good track to meet the FOMC's recently upward
revised core PCE forecast of 2.8% Y/Y for 4Q24 from the June SEP.
* Indeed, inflation would average exactly 2.80% Y/Y with a monthly rate of

  0.20% M/M from June onwards, implying a less troublesome 2.4% annualized over
  2H24.

* That run rate would be close to the 2.3% that the median FOMC participant
sees for end-2025 core PCE inflation - see chart.
* Chair Powell touched on the base effects at play on 2024 figures here. From

  the MNI Fed Review of the June decision: On the increase in the PCE inflation
  forecasts for 2024 by 0.2pp to 2.6% (headline) and 2.8% (core) despite the
  softer May print, and that being compatible with a rate cut later this year,
  Powell chalked most of the PCE acceleration up to year/year base effects,
  saying "if you're at 2.6% or 2.7%, that's a really good place to be."

* Most recently though, three-month core PCE inflation stood at 2.7% annualized
in May despite easing from 3.5% in April, whilst the six-month rate only
eased a tenth to 3.2% annualized.