Elena Nikulina

Core PCE remains more than 1 percent above target as rates hover near neutral, Skanda Amarnath warns

Core PCE remains more than 1 percent above target as rates hover near neutral, Skanda Amarnath warns
Core PCE and rates challenge outlook

Skanda Amarnath, industry influencer, outlines several key shifts in economic conditions. Amarnath points to a notable rise in both headline and core PCE inflation, with levels now more than 1 percent above target and still increasing. He also highlights that current rates are only 0.5 to 0.75 percent above neutral, suggesting limited monetary policy tightening. The labor market data has at least stabilized, with possible signs of improvement, while financial markets remain buoyant.

Earlier this year, Amarnath said the U.S. economy could absorb significantly higher oil prices without entering recession, according to a previous analysis. He has also noted the Federal Reserve’s attention to age-adjusted employment-to-population ratios as labor supply changes, as detailed in a separate report. These prior views provide additional context for his latest comments on inflation and the labor market.

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