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Dollar climbs after US PCE keeps rate-hike odds elevated

Markets now price a 40.1% chance of a Fed move of at least 25 basis points in September, up from about 36% before the data.

Wednesday, August 26, 2026 · Written up by our desk · Central Banks

The dollar rose on Wednesday after US inflation and growth data modestly increased expectations that the Federal Reserve will deliver another rate hike, ahead of the Jackson Hole symposium this week, according to Reuters via Yahoo Finance.

The Commerce Department said the Personal Consumption Expenditures Price Index increased 3.7% over the 12 months through July, unchanged from June but slightly above the 3.6% estimate in a Reuters poll. On a month-over-month basis, PCE rose 0.2% versus a 0.1% expected increase, after falling 0.1% in June.

Reuters reported that the dollar index was up 0.21% to 99.12, on pace for its biggest daily gain since August 6. The euro fell 0.16% to $1.1655 as markets adjusted rate expectations after the data.

Separately, updated second-quarter growth was 1.5%, and personal income rose 0.4% in July while consumer spending was unchanged. Reuters also cited Convera strategist George Vessey saying the details were not strong enough to give the “hawks” a clear win, and noted ECB board member Isabel Schnabel said interest rates must rise further due to the Middle East conflict and upside inflation risks from a strong euro zone economy.

Latest closeDollar index 99.64 ▼0.3%

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