🇺🇸❗️Cable FX Macro Weekly Note: Core PCE Deflator

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The annual core PCE deflator rate stood at 2.9% Y/y, up from 2.8% in June 2025 and marking the highest level since February 2025. On a monthly basis, it rose 0.3%. Despite the uptick, the inflation story supports expectations for further a potential Federal Reserve rate cuts, as the data aligns with a "soft landing" narrative—cooling but persistent inflation amid resilient growth. Economists note the focus shifting to labor market data, with odds favoring a 44 basis points of cuts into the year-end. The next release (for August 2025) is scheduled for September 27, 2025. Nowcasts from the Cleveland Fed (as of September 20) suggest August core PCE could ease slightly to around 2.7–2.8% annually. Economists broadly align with the Fed's median but emphasize data-dependence, with tariffs and labor trends as wild cards. Goldman Sachs forecasts three total 2025 cuts (to 3.00%–3.25%), citing weak jobs data.