Core personal consumption expenditures, an inflation indicator reported in the U.S. GDP release, stood at only 0.6% in the second quarter, according to the third and final Q2 GDP reading published by the U.S. Bureau of Economic Analysis this morning.
Economists were expecting the report to confirm the BEA's second reading of Q2 core PCE published a month ago, when the agency said it stood at 0.8%.
Core PCE of 0.6% marks a sharp drop in inflation from the first quarter, when core PCE stood at 1.4%.
The indicator is said to be the Federal Reserve's favorite measure of inflation, and over the past few months, FOMC officials including Ben Bernanke have cited a lack of inflation as a reason to be cautious in tapering back its quantitative easing program.
In a speech last Friday, St. Louis Fed president and FOMC voting member James Bullard described what may come to be known as the "Bullard Rule" — a modification to the Fed's current forward guidance on the path of short-term interest rates to include an inflation floor.
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