USD: Inflation Pressures Stay Firm, Wells Fargo Warns
New York — Inflation pressures in the United States remain stubbornly elevated, according to a fresh analysis from Wells Fargo economists, who caution that the path toward the Federal Reserves 2% target is proving slower than many anticipated. The assessment, released this week, underscores persistent price stickiness in key sectors, particularly services and housing, even as headline inflation has moderated from its 2022 peaks. Core PCE Remains Elevated Wells Fargo‘s report highlights that the core Personal Consumption Expenditures (PCE) price index — the Fed’s preferred inflation gauge — continues to run above 2.8% on an annualized basis. While energy and goods prices have eased, the services sector, which accounts for roughly two-thirds of consumer spending, shows little sign of rapid disinflation. “The disinflation process has hit a plateau,” the Wells Fargo team noted, pointing to sticky components such as rent, medical care, and insurance costs. Implications for the Federal Reserve The persistent inflation data complicates the Federal Reserve‘s timeline for potential rate cuts. Markets have priced in a first rate reduction as early as September, but Wells Fargo’s analysis suggests that the central bank will need to see several consecutive months of declining core inflation before it can confidently pivot. “We expect the Fed