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U.S. Inflation Growth Slows


The Federal Reserve’s favored inflation gauge inched up in September but continued to slow overall (MarketWatch).

What’s going on: “The Fed’s preferred PCE index moved up 0.2% last month, the government said Thursday. That matched the forecast of economists polled by The Wall Street Journal.”

  • In the past year, the increase in inflation has moved closer to the central bank’s target of 2%, slowing to 2.1% from 2.3%.
  • The September increase is “not enough to suggest inflation is rekindling or to prevent the Federal Reserve from cutting interest rates,” according to the news outlet.

However … Core PCE—which excludes often-volatile food and energy prices and is considered a “better predictor of future inflation trends”—increased 0.3% last month “and is still a source of concern to the Fed.”

The bottom line: “Whatever the case, the central bank is widely expected to cut interest rates again next week a few days after the presidential election. … If the core rate of inflation doesn’t come down further, however, the Fed may take a more cautious approach in cutting rates.”
 

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