Thought of the week

Oil prices dropped again last week as Iran and the U.S. edged closer to a deal that could reopen the Strait of Hormuz. The risk was that persistently higher energy prices might derail progress on disinflation and trigger another interest rate hike by the Federal Reserve (Fed). Fed Chair Warsh added to the debate by highlighting that the Fed’s preferred inflation measure, core Personal Consumption Expenditures (PCE), remains high. Notably, the median Consumer Price Index (CPI) inflation rate is now very close to the core rate, suggesting inflationary pressures are fairly even across the basket and that disinflation is continuing. Something that may be confirmed this week. However, core PCE sits 0.6 percentage points above the median PCE, indicating that inflation within PCE is concentrated in a few categories, possibly overstating the breadth of underlying inflation.

Median PCE inflation suggest inflation pressures continue to trend down

Year-on-year change

Source: Federal Reserve Bank of Cleveland, J.P. Morgan Asset Management. Data reflect most recently available as of 07/08/2026.

All returns in local currency unless otherwise stated.

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