CBO: Annualized PCE Inflation to Run 0.5 Points Higher in Q1 2027

The CBO's revision ties a higher near-term inflation path to a conflict with a direct fiscal price tag, which matters because it frames the Iran war as both a budget and a monetary problem rather than a geopolitical one alone. For crypto and RWA markets, the relevant channel is the rate outlook: a firmer PCE forecast gives policymakers less room to ease. Whether that inflation impulse proves transitory or feeds into expectations is the open question, and the CBO's own forecast horizon suggests it is not yet treating it as settled.