We maintain a high conviction that core PCE inflation will be back to the 2% target by mid-2024. Despite claims that “the last mile will be the hardest”, core PCE prices have already been running at a 2% annualised pace or less for the past seven months. With the current pace of core goods deflation likely to be maintained and significant further disinflation coming in both the housing and non-housing core services components, we expect that slower pace of core PCE price increases to be sustained this year.
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