PCE versus CPI: what's the difference in practice?

FTC Community TeamStaff17 Sept 2026100 views

The Fed targets PCE inflation, but the market trades CPI because it lands first. The two differ in weights and scope, and the gap between them sometimes tells its own story (PCE report).

PCE versus CPI: what's the difference in practice? — central bank rate path diagram — A central bank's policy rate path across recent meetings

How do you use both?

PCE versus CPI: what's the difference in practice? — risk-reward diagram — A risk-reward ratio of 1 to 2

which measure you weight for the Fed's path
how you read the gap between them
the release you prioritise on the calendar

Background: CPI explained.

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