The U.S. Bureau of Economic Analysis will release the July Personal Consumption Expenditures price index report at 8:30 a.m. Eastern Time on Wednesday, or 8:30 p.m. Taipei time. The Federal Reserve’s main gauge of inflationary pressure is expected to influence market expectations for the September policy meeting. Headline PCE is forecast to rebound about 0.1% month over month after falling 0.11% in June, its first monthly decline since 2020, while the annual rate is expected to ease from 3.7% to about 3.6%. Core PCE, which excludes food and energy, is expected to hold at 3.3% year over year and accelerate to 0.2% month over month from 0.1% in June. Core PCE has exceeded the Fed’s 2% long-term target for 65 consecutive months. Christopher Hodge of Natixis said tariffs are no longer affecting inflation data, but rising prices for computer hardware and software linked to artificial intelligence and large-scale data-center construction continue to pressure core inflation. UBS Group economists said AI-related costs are gradually becoming more prominent in the inflation basket. Goldman Sachs senior economist David Mericle said higher equity valuations may have lifted portfolio-management fees, contributing 0.11 percentage points to July’s core PCE monthly increase. Forecasts range from FactSet’s 0.07% headline monthly increase and 3.6% annual rate to UBS Group’s 0.16% and 3.6%, while core monthly forecasts run from 0.18% at FactSet to 0.25% at UBS Group. The BEA plans a broad methodological overhaul at the end of September covering areas including computer hardware, equity portfolio management and legal services, meaning July data may later be revised. CME FedWatch currently implies about a 60% chance of unchanged rates and a 40% chance of a 25-basis-point hike in September, compared with a 36% hike probability last week. For December, about 45% of investors expect a 25-basis-point hike, while about 27% expect rates to remain unchanged. ClearBridge Investments’ Josh Jamner expects the Fed to await August CPI and nonfarm payrolls data, making no policy change the most likely outcome. Natixis’ Hodge also favors a hold but said current hike pricing is reasonable and that an unexpectedly strong PCE reading could increase the chance of a September hike. Investors are also watching the Jackson Hole Economic Symposium, where Fed Chair Kevin Warsh is expected to provide signals on inflation and monetary policy. July FOMC minutes indicated that several officials may support further hikes if inflation remains elevated. Energy costs linked to Middle East risks, particularly conflicts related to the Strait of Hormuz, could also determine whether higher energy premiums spread into goods and services.