Morgan Stanley expects a firmer reading in February’s core personal consumption expenditures (PCE) price index, forecasting a monthly gain of 0.35%. The bank attributes the strength to persistent goods inflation and a rebound in core services prices excluding housing.

In contrast, the headline PCE index is projected to rise by a slightly softer 0.32% month-on-month, with declines in food and energy prices helping to temper the overall figure. The divergence between headline and core inflation underscores the stickiness of underlying price pressures that the Federal Reserve is monitoring closely.

• “Core inflation looks set to remain firm, with price pressures broadening again in the goods sector and some reacceleration in services outside of housing”

The bank’s forecast, if realised, would reinforce concerns that progress on disinflation may be stalling, potentially complicating the Fed’s timing on rate cuts. Markets are watching the upcoming PCE data closely, as it is the Fed’s preferred inflation gauge.

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The data is due at 1230 GMT / 0830 US Eastern time: