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[US PCE Inflation Meets Expectations Across the Board; Core Indicators Remain Sticky, Testing the Narrative of Interest Rate Cuts] ⑴ The overall US PCE price index rose 0.4% month-on-month in February, in line with market expectations, compared to 0.3% previously; the year-on-year increase remained stable at 2.8%, also fully in line with expectations and unchanged from the previous month. ⑵ The core PCE price index, excluding food and energy, also recorded a 0.4% month-on-month increase, in line with expectations and unchanged from the previous month; the year-on-year increase slightly declined to 3.0%, a slight decrease of 0.1 percentage points from the previous 3.1%, but still stubbornly above the Fed's 2% policy target. ⑶ Further excluding the housing component, the core PCE showed that the price index excluding food, energy, and housing rose 0.4% month-on-month, unchanged from the previous month, indicating that the underlying inflationary pressures other than housing costs have not shown signs of easing. ⑷ The PCE price index for services, excluding energy and housing, rose only 0.2% month-on-month, a significant cooling from 0.5% in January, indicating a marginal weakening of inflationary momentum on the service side, one of the few signs of easing in the inflation landscape. (5) Analysts point out that although the core year-on-year reading has slightly declined, the annualized rate of increase of 0.4% month-on-month is still close to 5%. Coupled with the fact that the lagged transmission of the Middle East situation's impact on oil prices to the March data has not yet been reflected, the Federal Reserve's confidence in a sustained return of inflation to its target is unlikely to be rebuilt in the short term. (6) After the data release, the market's pricing of the Federal Reserve's interest rate path remained largely unchanged. Expectations for rate cuts are still constrained by both inflation stickiness and geopolitical premiums. The focus has quickly shifted to whether the upcoming March CPI report can provide clearer evidence of an inflation turning point.