Truflation has called for the Federal Reserve to cut interest rates after its July forecast came within 0.01 percentage point of the official monthly headline PCE reading and matched the other three published figures.
PCE Data Shows Inflation Holding at 3.7%
The U.S. Bureau of Economic Analysis reported on Aug. 26 that the PCE Price Index rose 0.2% month over month in July, reversing a 0.1% decline recorded in June. Annual headline inflation remained unchanged at 3.7%. Core PCE, which excludes food and energy, also increased by 0.2% on a monthly basis and held at 3.3% from a year earlier. The Federal Reserve uses PCE as its preferred measure of inflation and has set a long-term inflation target of 2%.
Five days before the government release, Truflation estimated that headline PCE would increase 0.19% monthly and stay at 3.7% annually. The 0.19% headline estimate rounds to the 0.2% figure published by the BEA. This macro context is relevant to the broader crypto market, including the Bernstein forecast of Bitcoin reaching $150K by mid-2027.
Truflation Calls Data a Turning Point
Truflation Head of Data Oliver Rust said softer household demand, mixed employment data and falling gasoline prices have created a case for lower borrowing costs. Official data offered some support for the demand side of Rust's argument. The BEA said inflation-adjusted personal consumption expenditures were almost unchanged in July, down from a 0.4% increase in June. Current-dollar spending rose by $36.3 billion as an $86.2 billion increase in services was partly offset by a $49.9 billion decline in goods.
Truflation's report said declining excess savings and increased reliance on credit could reduce consumer demand during the second half of 2026. Retail sales also fell 0.6% in July, ending an eight-month run without a monthly decline. This economic data connects to the broader market sentiment, including the crypto market entering extreme greed for the first time since 2024.
Fed Officials Remain Cautious About Rate Cuts
Rust's call for lower rates stands apart from the current debate inside the Federal Reserve. Kansas City Fed President Jeffrey Schmid said the existing 3.5%-3.75% policy range did not appear restrictive enough to return inflation to 2%. Chicago Fed President Austan Goolsbee also described persistent inflation as concerning, although he said rates could fall over time if the data showed prices moving back toward the central bank's target.
Truflation's indexes use more than 15 million product prices from over 30 data partners and sources. The company publishes its readings daily, while the BEA releases PCE figures monthly. Truflation's data leads the BEA measure by an average of approximately 30 days. July represented only the fourth PCE forecast Truflation has published, with the company matching the previous month's result and missing the April and May readings by 0.1 percentage point each.
