The U.S. Commerce Department reported on December 5 that the PCE price index rose 0.3% month-over-month in September, pushing the annual rate to 2.8% from 2.7% in August, Jin10 reports. Core PCE inflation, excluding food and energy prices, declined to 2.8% from 2.9% in August. The Fed's preferred inflation gauge remained below 3% with moderate monthly increases, potentially supporting a rate cut at next week's meeting. A government shutdown delayed October inflation and November employment data, leaving officials to assess policy based on outdated indicators as they balance elevated inflation against cooling labor market conditions.

The U.S. Commerce Department released September's core Personal Consumption Expenditures (PCE) price index data on Dec. 5, showing a 0.2% monthly increase and 2.8% annual rise, with the annual rate 0.1 percentage point below expectations, Bureau of Economic Analysis data show. Overall PCE climbed 0.3% month-over-month with annual inflation at 2.8%, both meeting forecasts. The Federal Reserve uses the PCE price index as its primary inflation gauge, with core data considered a more reliable indicator of long-term trends.

The U.S. core Personal Consumption Expenditures price index fell to 2.8% year-over-year in September, below market expectations of 2.9%, Jin10 reports. The reading marked a three-month low and deviated from forecasts that anticipated the rate would hold at 2.9% for a third consecutive month.

Bank of America anticipates markets may soon price in a January Federal Reserve rate cut more aggressively despite cautious policy signals from the central bank, Jin10 reports. The bank expects a 25 basis point cut in December alongside hawkish guidance and potential dissents, with economic projections likely showing stronger growth and lower inflation. Analysts note Fed Chair Jerome Powell may struggle to suppress expectations for further easing given the volume of data releases scheduled before January, making it difficult to shift market focus away from data-dependent policy expectations.

The incoming Federal Reserve chair will confront significant policy tensions as tariff measures push up prices across multiple goods categories, a December 5 analysis shows. The U.S. is set to enter high-stakes trade negotiations with Canada and Mexico in the coming year, while pressure mounts for rate cuts despite ongoing inflation concerns. The situation will test the Fed's core assumption that tariffs produce one-time price increases rather than sustained inflationary cycles. Kevin Hassett, a long-time advisor and current frontrunner for the position, would face the challenge of balancing simultaneous demands for lower rates, strong economic messaging, and inflation control amid tariff-driven price pressures.

Kevin Hassett, Director of the White House National Economic Council, said on Dec. 5 that the Federal Reserve should proceed with cautious interest rate reductions, Jin10 reports. He projected the government shutdown's impact would exceed initial expectations, with a stronger rebound anticipated in Q1 next year, and estimated economic growth could reach 4% by 2026. Hassett noted AI economic development is outpacing the 1990s internet boom, adding that a Supreme Court rejection of tariffs would create significant disruption, while confirming he has not discussed Federal Reserve Chair candidates with President Trump.

Bank of America strategists warned that an overly dovish Federal Reserve outlook at next week's meeting could threaten the year-end stock rally, with the S&P 500 currently within 0.5% of its October peak. Strategist Michael Hartnett said a dovish rate cut might test current optimism by signaling an economic slowdown exceeding expectations. "The only thing that can stop a Santa Claus rally is a Fed dovish cut triggering a selloff in long-duration U.S. Treasuries," Hartnett wrote. The team also noted that delayed key employment and inflation data releases in late December, due to government shutdown impacts, will pose additional market risks.

Wang Yongli, former Vice President of Bank of China, said on Dec. 5 that China's policy to curb virtual currencies including stablecoins has been fully clarified, BlockBeats reports. The policy reflects considerations including China's leading position in mobile payments and digital yuan, yuan sovereignty security, and financial system stability. Wang argued that yuan-denominated stablecoins offer no advantage and may threaten yuan sovereignty, while stablecoins pose risks for cross-border money laundering and fraud.

The U.S. September Personal Consumption Expenditures (PCE) price index will be released at 23:00 today, BlockBeats reports. Economists forecast the overall PCE annual rate at 2.8%, up from August's 2.7%, which would mark the highest level since April 2024 if confirmed, while the monthly rate is expected to hold steady at 0.3%. The report's publication was delayed due to a prior government shutdown. Should the data align with forecasts indicating moderating inflation, it may strengthen the case for a December rate cut, whereas an upside surprise could support maintaining the current 3.75%-4% rate range.