Fed's Preferred Inflation Measurement Comes In Better Than Feared In July: What You Need To Know

The core personal consumption expenditures price index for July, which excludes volatile food and energy prices, increased to $23.7 billion or 0.1% month-over-month in July, the Bureau of Economic Analysis announced Friday. Economists were expecting a 0.3% increase. 

The figure is the Federal Reserve's preferred measure of inflation — a subject Fed Chair Jerome Powell addressed Friday morning at the Jackson Hole Economic Symposium. 

Also Read: Stocks Plummet As Powell Doubles Down On Fed's Inflation Fight Until 'The Job Is Done'

Soft Landing Expectations: Former PIMCO chief economist, Paul McCulley said on CNBC’s "Squawk on the Street" that he expects interest rates to settle in the range of 3.5% to 4% in the next six months to year, as the Fed will have to maintain a restrictive policy to achieve price stability.

McCulley said he believes a soft landing is still achievable, but more pain will come as the Fed maintains higher rates for longer.

Atlanta Fed President Raphael Bostic said in an interview with CNBC’s Steve Liesman that if the Fed’s target for inflation reaches 3.25% to 3.5% and the economy begins to slow, then he would lean toward holding rates so the economy can absorb the rate hikes and reach a neutral rate of 2% inflation.

The Last Word: Leading up to Friday, numerous Fed officials including Powell have signaled  the personal consumption expenditures price index would be a leading indicator of interest rate hikes for the September meeting.