Definition. An inflation measure published monthly by the US Bureau of Economic Analysis (BEA). It's the gauge the Fed uses for its 2% inflation target.
How it works
PCE covers a broader basket of spending than CPI and weights its components differently. The market pays particular attention to the core version, excluding food and energy.
Example
It's usually released at the end of the month at 8:30 AM New York time (14:30 in Warsaw). Because CPI comes out earlier, the reaction to PCE is often smaller, but it grows when the number deviates from expectations.
What to watch out for
The market reacts to the surprise versus forecasts. Volatility rises at the moment of release.
You'll find the full explanation with graphics, examples and exercises in the 🖥️ Order flow atlas space, and its use in the live market in the 🔴 Live Room. Both are available to Club members (in Polish).
