US PCE Inflation Estimates by JPMorgan, BofA, & Other Wall Street Banks

Stock and crypto market participants globally are closely watching the US Personal Consumption Expenditures (PCE) inflation data, a preferred metric for the Fed’s interest rate decisions.

With the US dollar index rising towards 98 on Friday, the upcoming release is critical as all assets including stocks, gold, Bitcoin are getting hammered amid rising market uncertainty. Several major Wall Street banks such as JPMorgan, Bank of America (BofA), Goldman Sachs, and Morgan Stanley have issued their US PCE inflation forecasts.

US PCE Inflation to Come in Hot, Wall Street Giants JPMorgan, BofA, Other Estimate

The U.S. Bureau of Economic Analysis will release the December US PCE inflation report on February 20. Bitcoin, gold, and stock markets are trading in red ahead of the key inflation data after FOMC Minutes revealed Fed officials are divided over rate cuts and hikes.

JPMorgan expects the headline and core PCE inflation at 0.37% month-over-month (MoM), pushing the annual core PCE rate to 2.9%. This shows a modest uptick in both core PCE and headline inflation from 0.2% and 2.8% in November.

Moreover, Bank of America (BofA), Morgan Stanley, Barclays, and others predict core PCE inflation increased 0.39%-0.40% MoM and 3% YoY and headline PCE at 2.9% YoY. Goldman Sachs, Citi, and UBS forecasts are lower, but annual projections remain in line with other Wall Street forecasts.

The WSJ’s Nick Timiraos reveals that forecasters expect core and headline PCE inflation was 0.37% in December and 4.5% annualized rate. It raises the core PCE index to 3% over 12 months, the highest since February 2025. Also, headline PCE is estimated at 2.9%, the highest since March 2024.

Economists See Rising Inflation and Fed Rate Pause

Economists’ forecasts also point to a rise in inflation in December, with core PCE inflation data expected to rise 0.3% month-over-month (MoM), up from 0.2% previously. The year-over-year (YoY) print is projected at 2.9%, above 2.8% in November.

Meanwhile, headline PCE is also projected at 0.3% MoM, but the annual inflation rate is estimated to stay at 2.8%.

Notably, Cleveland Fed claims its nowcasting model predicts year-over-year headline PCE inflation of 2.60% for January and annual core PCE of 2.78%.

Rising inflation would cause the Federal Reserve to keep the interest rate stable at 3.50%-3.75% in March and could further delay next rate cut this year. While TradeFi institutions and traders have scaled back expectations for aggressive easing, but expects two 25 bps Fed rate cuts this year.

The CME FedWatch Tool shows 48% odds of a 25 bps rate cut by the central bank in June, bringing the target range to 325-350 bps. However, Wall Street giants expects first rate cut in July.

TradeFi and retail investors are also focusing on advance fourth-quarter GDP figures after robust US economic data and hawkish signals. On Thursday, BTC fell after jobless claims fell to a five-week low.

Bitcoin price holds above $67K, rebounding almost 1% in the last few hours. The 24-hour low and high are $65,637 and $67,456, respectively. Trading volume remains low ahead of crypto options expiry and US PCE inflation release.