US DATA: Consensus Core PCE Should Keep FOMC Forecast Attainable (2/3)

* A core PCE print of 0.13% M/M in May (per unrounded estimates in part 1)

  would see the three-month rate ease from 3.5% to 2.9% annualized but the
  six-month rate accelerate a tenth to 3.3% as the particularly soft 0.09% M/M
  from Nov'23 drops out.

* Looking ahead, it would 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, it would be met 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."