Yeliz Akmaca 
Ahead of the upcoming US PCE inflation report, Wall Street’s largest banks have raised their expectations. JPMorgan and Bank of America, among others, project that core PCE will rise about 0.37% monthly, pushing the annual rate to 2.9%. This level could directly affect the Fed’s timing for rate cuts.
Markets are already pricing in some of this. The dollar index is approaching 98, while Bitcoin and stocks have limited room to move. Major investors appear to be waiting for the data before taking new positions.
Wall Street Banks Expect Limited but Crucial Inflation Increase
JPMorgan forecasts a 0.37% monthly rise in both headline and core PCE. While this seems modest, it translates into a notable annual effect, lifting core PCE to 2.9%. November’s rate was 2.8%.
Bank of America, Morgan Stanley, and Barclays expect core inflation to rise 0.39–0.40% monthly, with an annual rate around 3%. Goldman Sachs, Citi, and UBS forecast smaller increases, but the overall picture is the same: the downward trend in inflation is slowing.
This is critical because core PCE is a primary reference for the Fed’s monetary policy.
Rate Cut Expectations Are Moving Further Out
If inflation rises as expected, the Fed may remain cautious about rate cuts. Recent strong employment data and resilient economic activity already reduce the likelihood of an early cut.
Futures indicate about a 48% chance of a June rate cut, while most Wall Street institutions see the first cut more likely in July. This adjustment is gradually recalibrating short-term liquidity expectations.
Bitcoin and Global Markets Trade in a Narrow Range
Crypto markets are similarly cautious. Bitcoin traded between $65,637 and $67,456 in the last 24 hours. Price hovering around $67,000 reflects investor caution ahead of macro data.
Trading volume is low, and options expiration is approaching, keeping volatility subdued. After the data, market direction is expected to clarify.
The stronger dollar and delayed rate cut expectations are key factors applying short-term pressure on risk assets, but the outlook is not one-sided.
The Big Question: Is Inflation Rising Again?
The PCE report will provide the first clear answer. If core inflation reaches 2.9%, the Fed may postpone cuts further, delaying liquidity expectations.
Market reaction often reflects uncertainty more than the direction itself. Once clarity arrives, even a neutral or slightly negative outcome could ease tensions.
Micro Data Block
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JPMorgan core PCE forecast: 0.37% (monthly)
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Wall Street forecast range: 0.37–0.40% (monthly)
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Expected annual core PCE: 2.9–3.0%
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Bitcoin 24-hour range: $65,637 – $67,456
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Dollar index: near 98
The US PCE inflation report will shape both the macro outlook and the Fed’s policy path. With major Wall Street banks revising forecasts upward, the slowdown in inflation is showing signs of stalling. Market volatility for Bitcoin, equities, and the dollar may rise immediately after the release. Rate cut timing remains the main driver of risk appetite.
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