The US Commerce Department releases its Personal Consumption Expenditures report on Friday, with economists expecting the core PCE price index to show inflation moderating in May. The Federal Reserve views this as its preferred measure of price pressures.

The Bureau of Economic Analysis report follows the Federal Reserve's June decision to hold its benchmark rate steady while signaling that two cuts remained possible later in 2026. Investors have closely watched incoming inflation data to confirm that price growth is returning sustainably toward the central bank's 2% goal.

Economists surveyed by Reuters and Bloomberg have forecast core PCE rising around 0.2% on the month, with the annual rate easing modestly. Personal income and consumer spending figures in the same release will offer insight into household resilience amid tariff-related uncertainty.

A softer-than-expected inflation print would likely strengthen market expectations for a Federal Reserve cut as early as September, supporting equities and weighing on Treasury yields. A hotter reading could push back rate-cut bets and revive concerns that tariff costs are filtering into consumer prices.

Federal Reserve Chair Jerome Powell has repeatedly emphasized that policymakers want greater confidence that inflation is on a durable path lower before easing monetary policy. Friday's data will be among the final major indicators before the Fed's July meeting.