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A closely watched inflation report is set to reveal how much price growth picked up in May — and whether many American consumers remain mired in an affordability crunch.

Wall Street forecasters expected the pace of personal consumption expenditures (PCE) to have quickened compared with April data amid higher oil prices and stronger consumer spending.

The monthly PCE report is the Federal Reserve’s preferred inflation gauge. New Fed Chairman Kevin Warsh has said the central bank is committed to bringing inflation back to its 2% target — a level it has failed to reach for the past five years. Wall Street now anticipates the Fed will raise its key interest rate at least once by year’s end in a bid to counteract the stronger price growth.

By making it more expensive to borrow money, the Fed slows overall economic activity and, with it, the pace of price increases.

“Thursday’s PCE is set to take on greater importance for markets, especially since Federal Reserve Chair Warsh was emphatic in last week’s meeting about the central bank’s desire to achieve price stability, and this PCE reading could affect the market’s rate hike expectations,” Rick Gardner, chief investment officer at North Carolina-based RGA Investments, said in a statement.

Until Wednesday, the direction of key interest rates had begun to decouple from that of oil prices, an unusual setup given they tend to rise together as dual threats of worsening inflation.

But things got back on track Wednesday, as oil prices hit new postwar lows and the yield on the 10-year U.S. Treasury note, seen as a benchmark for borrowing costs throughout the economy, fell 9 basis points, to a level last seen in April.

Treasury Secretary Scott Bessent expressed confidence that inflation is moving in the right direction.

“Now that we are, I believe, on the other side of this conflict, gas prices will come back down, inflation will come back to target,” he said Wednesday after an appearance at the Economic Club of New York.

With the war drawing to a close and vessels moving again through the Strait of Hormuz, some analysts predict Warsh will try to pursue a more “dovish” tack, or one designed to lower interest rates.

President Donald Trump remains dead set on bringing rates down, and in the run-up to his appointment, Warsh expressed some skepticism about traditional inflation gauges that would support a case for keeping rates elevated.

In a note to clients, research analysts with Citigroup said Warsh’s decision to create “task forces” to re-examine the Fed’s approaches could result in decisions that lean dovish.

“The market seems to underappreciate the flexibility implicit in appointing task forces to consider the drivers and measurement of inflation,” the analysts wrote.

Stock gains themselves have also shown signs of stuttering after a nearly unprecedented run of gains in April and May.

Over those two months, thanks largely to gains in tech and despite the Iran war, the S&P 500 rallied 16%, which has occurred only one other time outside of post-recession bounces. The other time was just a few months before Black Monday’s 1987 21% plunge.

The S&P 500 is down about 4% from its all-time high this month. The Fed’s telegraphing higher rates did not help — but the market may also simply have run out of room to run.

“Given we’d seen such a big rally that had stretched traditional valuation metrics, there simply wasn’t much space to rally further to start with,” Henry Allen, macro strategist at Deutsche Bank financial group, said in a note to clients this week.