# Why the Fed Is Watching the PCE Over CPI Now

Page: https://stenobird.com/podcast/the-federal-reserve-podcast-with-fexingo-interest-rates-fomc-meetings-and-monetary-policy-7871696/why-the-fed-is-watching-the-pce-over-cpi-now
Text version: https://stenobird.com/podcast/the-federal-reserve-podcast-with-fexingo-interest-rates-fomc-meetings-and-monetary-policy-7871696/why-the-fed-is-watching-the-pce-over-cpi-now.md
Podcast: [The Federal Reserve Podcast with Fexingo: Interest Rates, FOMC Meetings, and Monetary Policy](https://stenobird.com/podcast/the-federal-reserve-podcast-with-fexingo-interest-rates-fomc-meetings-and-monetary-policy-7871696)
Published: 2026-07-13T17:53:58+00:00
Episode link: https://audio.fexingo.com/business/the-federal-reserve-podcast/episode-0112.mp3
Audio file: https://audio.fexingo.com/business/the-federal-reserve-podcast/episode-0112.mp3
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JSON: https://stenobird.com/v1/public/podcasts/the-federal-reserve-podcast-with-fexingo-interest-rates-fomc-meetings-and-monetary-policy-7871696/episodes/why-the-fed-is-watching-the-pce-over-cpi-now
Duration seconds: 433

## Resource

Episode 112 of The Federal Reserve Podcast with Fexingo digs into a subtle but critical shift in how the Fed reads inflation. While headline CPI still grabs headlines, Lucas and Luna explain why the central bank's preferred gauge — the personal consumption expenditures price index, or PCE — is telling a different story. With core CPI at 336.1 and core PCE at 130.1, the gap between them has widened. This episode explores why PCE matters more for rate decisions, how it accounts for substitution effects, and what the latest data suggests about the path forward. Lucas breaks down the compositional differences — PCE weights health care and housing differently, catches discount shopping, and smooths out volatility. Luna questions whether the Fed's reliance on PCE is becoming outdated as 'funflation' reshapes consumer spending. Along the way, they reference the inverted yield curve, Fed funds rate held at 3.62 percent, and the falling labor force participation rate. A focused, data-driven conversation for anyone tracking the next FOMC move. #PCE #CorePCE #CPI #CoreCPI #FederalReserve #FOMC #MonetaryPolicy #Inflation #InterestRates #Funflation #LaborForceParticipation #YieldCurve #FedFundsRate #CentralBank #Economics #FexingoBusiness #BusinessPodcast #FedPodcast Keep every episode free: buymeacoffee.com/fexingo

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