Wall Street watches PCE indicator·Fed officials' remarks [Weekly outlook for New York stock market]

Pace of rate cuts may be decided by the August PCE indicator

Concerns over a federal government shutdown are also a market risk

This week, the New York stock market is expected to focus on key inflation indicators and public remarks by officials of the U.S. central bank (Fed).

At the regular Federal Open Market Committee (FOMC) meeting on the 17th–18th, the Fed cut the policy rate by 0.25% point and signaled two additional rate cuts this year. The cut was a 'risk management' measure related to the fact that, while the economy has not entered a recession, employment is cooling rapidly.

However, depending on how the August personal consumption expenditures (PCE) price index, scheduled for release on the 26th, comes out, the pace of rate cuts could change. Chairman Jerome Powell said at the post-FOMC press conference that inflation from tariffs would be temporary, but if the PCE inflation rate comes out higher than expected, it is highly likely to put the brakes on this outlook. According to a FactSet survey, the August PCE price index is expected to rise 0.3% month-on-month, higher than the previous month's 0.2% increase. The core PCE price index, which excludes volatile food and energy, is forecast to rise 0.3% month-on-month. The prior month's figure was also a 0.3% increase.

Along with inflation indicators, public remarks by key Fed officials are also expected to draw market attention. With the FOMC meeting concluded, key Fed officials will explain their respective views on the future rate path. The number of votes against rate cuts at last week's meeting was smaller than the market had expected.

Meanwhile, Wall Street is also concerned about the possibility of a federal government shutdown. The U.S. Congress failed on the 19th to pass a continuing resolution (CR) to prevent a temporary shutdown of the federal government. This was because the CR passed by the House was rejected in the Senate. Congress will go into recess for a week starting that afternoon, and if this schedule is maintained, there will be little time left after returning to prevent a shutdown.

New York=Park Shin-young, correspondent nyusos@hankyung.com