Today's PCE report won't change the backdrop for the Fed: Wall Street

The Personal Consumption Expenditures (PCE) price index, a key inflation gauge that the Federal Reserve closely monitors, showed only a modest increase in June.

The core PCE inflation, which excludes volatile food and energy prices, edged up by 0.18% month-over-month, slightly higher than the anticipated 0.16%.

Despite this increase, the year-on-year core PCE reading remained unchanged at 2.6%, bolstered by upward revisions to May's core PCE figures, which were adjusted from an initial 0.08% to 0.13%.

In the same report, personal income growth was reported to be weaker than expected, rising by only 0.2% month-over-month.

What economists are saying

Citi: "We continue to expect Fed officials to begin a series of rate cuts starting in September."

Wells Fargo: "Today's report on June personal income and spending is the last major indicator before next week's Fed meeting and while there is plenty to unpack, there is nothing that compels a rate cut at the July meeting or that prevents one in September."

Bank of America: "The June personal income and outlays report was another tick of the box. Inflation is back on track towards the 2% target even if base effects will lift the y/y rate in 2H. Therefore, the likelihood a rate cuts continues to increase.

"That said, solid spending and strong GDP growth means the Fed can be patient and await more data. We remain comfortable with our forecast that cuts will start in December, but upcoming inflation and employment data could tip the scale to an earlier cut. Focus now shifts to July data."