Goldman Says July CPI Encouraging, Flags 0.2% Core PCE

Goldman Sachs Asset Management called July CPI encouraging and said core PCE is expected to rise about 0.2% month‑over‑month, a fee-linked 8bp boost that keeps a September pause plausible.

Portfolio fees add 8 basis points

Lindsay Rosner, head of multisector fixed-income investing at Goldman Sachs Asset Management, said the in-line CPI print adds to signs that underlying inflation is moderating but left room for revision because another inflation report arrives before the Fed meets in mid-September. Goldman Sachs economists projected July core PCE would outpace core CPI by roughly 0.1 percentage point, attributing most of the gap to higher portfolio management fees.

The firm said fee income scales with asset values, so strong second-quarter equity gains mechanically lift the PCE index; Goldman estimates this adds about 8 basis points to the core PCE reading. The bank described the effect as a technical, market-linked distortion rather than evidence of a broad-based reacceleration in prices and said it does not by itself overturn the disinflation narrative.

Goldman also flagged impending methodology changes to PCE that could introduce volatility in coming readings and possibly lower annual core inflation. The firm’s house view remains that the Federal Reserve will hold policy rates through the end of the year, subject to one more inflation print in early September ahead of the Fed’s mid-September meeting.