Deutsche Bank: Fed rate hike expectations recede on cooler PCE data

Deutsche Bank has noted that expectations for a U.S. Federal Reserve rate hike have receded after the Personal Consumption Expenditures (PCE) price index, released on June 25, rose 0.4% month-over-month, falling short of economists' 0.5% forecast. In a report, Deutsche Bank analysts assessed that the data helps curb the narrative of a Fed rate hike, which had been gaining traction in recent weeks. They added that while Fed officials remain cautious on the inflation outlook, speculation is growing that the central bank may not need to raise rates this year. Consequently, the U.S. dollar weakened slightly as the market lowered its expectations for a rate increase.