Citigroup predicts that core PCE is approaching 2% annualized level, and the Federal Reserve's interest rate hike cycle may end earlier

Citigroup believes that if the short-term growth rate of core PCE continues to approach the annualized level of 2%, the Fed's interest rate hike cycle may end earlier than expected. Citigroup economist Andrew Hollenhorst said that the US economy is not overheated, and if underlying inflation continues to cool down, the precautionary reasons for raising interest rates in September may weaken. Citigroup expects core inflation to remain low for the next four months and points out that there is a downside risk to core inflation in September. Federal Reserve Chairman Kevin Walsh has not yet specified a standard for sufficient speed, and a core PCE depreciation rate of about 2% for several consecutive months can be considered a reasonable reference.