Tame CPI Still Spells Trouble for Fed’s Favored Inflation Gauge

Mar 11, 2026

Guest

Ellen Wald

Guest

Gary Evans

Guest

Gerry Doyle

Ellen Wald, energy markets expert and author, explains how Middle East disruptions could jolt oil supply. Gary Evans, CEO of United States Antimony, discusses ramping U.S. critical-mineral production and defense grants. Gerry Doyle, global defense editor, analyzes how the U.S.-Iran conflict strains military stockpiles. They dig into oil, minerals, supply chains and military logistics in short, fast-moving conversations.

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INSIGHT

PCE CPI Divergence Could Keep Fed On Hold

Core PCE and CPI are diverging with PCE running hotter, driven partly by shelter and tariff pass-through into core goods.
Yelena Shulyatyeva warns this wedge could force the Fed to delay rate cuts as oil shocks and tariffs lift PCE above core CPI by an unusually wide margin.

INSIGHT

Iran's Cheap Weapons Create Persistent Risk

Iran's remaining arsenal of missiles, drones, and cheap naval mines creates persistent asymmetric threat despite loss of conventional forces.
Gerry Doyle notes U.S. planners may have misjudged Iran's will to keep striking and the economic impact if the Strait of Hormuz is disrupted.

ADVICE

Speed Domestic Critical Minerals With Grants

Move quickly to build domestic critical-mineral capacity to reduce reliance on foreign suppliers and supply shocks.
Gary Evans says permits and land already in hand speed projects, but government grants accelerate build-out significantly.

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A key measure of US inflation was tame at the start of the year. But another metric is shaping up to paint a very different picture.Wednesday’s report on the consumer price index showed core inflation, which excludes food and energy costs, was mild in both January and February — a pleasant surprise as companies tend to raise prices at the turn of the year. Yet economists expect another gauge, one preferred by the Federal Reserve and set for release on Friday, was probably rather strong in both months.

The fact that the personal consumption expenditures price index has been outpacing the CPI is already unusual. Typically it’s been the other way around, as a higher weighting on housing costs in the CPI tends to keep that measure relatively elevated.
Now the wedge appears to be deepening. Should the core PCE rise 3.1% in the year through January as economists expect, it would exceed the annual core CPI by one of the widest margins in decades.

The divergence began before the Iran war, which has sent oil prices sharply higher and renewed risks of a broader acceleration in inflation. That puts the Fed in a tough spot. While policymakers are broadly expected to leave interest rates unchanged next week, a sustained pickup in price pressures would make it difficult for officials to justify resuming rate cuts in coming months to shore up a fragile labor market.

The PCE price index, a product of the Bureau of Economic Analysis, draws from the CPI for several price categories. In the wake of the latest CPI data, economists were quick to boost their forecast for the February core PCE price index, which is due April 9. Several projected it would rise 0.4% for a second month, with some penciling in a bigger pickup.

Today's show features:

Yelena Shulyatyeva, The Conference Board Senior US Economist, on today's CPI reaction as we count down to next Fed decision
Gerry Doyle, Bloomberg News Global Defense Editor on Iran’s Cheap, Plentiful Weaponry Puts US Military Under Strain
Gary Evans, US Antimony CEO on the company's $27M award from Dept of Defense under the Defense Production Act
Ellen Wald, Transversal Consulting & Atlantic Council Senior Fellow on the latest in the oil markets

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