The PCE is a key index for the Fed, which uses this indicator to adjust its monetary policy and keep inflation within its 2% objective, in favor of economic stability.
Inflation in the US fell in September to its lowest level since February 2021 in the annual measurement, according to the Personal Consumption Expenditure Price Index (PCE in English), the preferred indicator of the Federal Reserve, published this Thursday , just five days before the presidential elections.
The latest reading of the Personal Consumption Expenditure (PCE) Price Index showed that inflation rose 2.1% in September, compared to 2.3% in August, moving closer to the Fed’s 2% target.
Core inflation, which excludes volatile prices such as food and energy, remained stable at 2.7% annually in September. In the monthly measurement, there was a slight increase of 0.3% between August and September, compared to the 0.2% variation between July and August.
The recently published consumer price index (CPI) also fell in September to its lowest level since February 2021, standing at 2.4% annually.
Reading the Fed and the election
Inflation is a key issue in the presidential race, just days before the November 5 election between Vice President Kamala Harris and former Republican president Donald Trump.
The Federal Reserve may not have received the inflation data it expected on Thursday, but some analysts in the North noted that a new reading of the Fed’s preferred price index will likely keep the central bank on track for a 25 basis point rate cut. at its monetary policy meeting next week.
Other economists who also anticipate a small cut in November acknowledged there could be a debate among policymakers about whether to pause in November. It will be up to Fed Chair Jerome Powell to maintain a consensus for rate cuts, a Fed observer said.
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And it happens that the new data could provide more arguments to Fed members with a more restrictive stance to make future cuts gradually and cautiously. After all, the core PCE remains at 2.7% for three consecutive months instead of falling.
The inflation report is published before a second crucial data for the Fed: a reading of the labor market that will be known on Friday. Economists expect only 105,000 jobs to be added in October due to the two hurricanes and the Boeing strike, which would represent a drop compared to the 254,000 jobs added in September. The unemployment rate is expected to remain stable at 4.1%.
A few days before the elections, the president highlighted a new moderation in price increases in the country in a statement from the White House, in which he accused the Republicans of having “a program that increases costs” for families.
Source: Ambito
I’m a recent graduate of the University of Missouri with a degree in journalism. I started working as a news reporter for 24 Hours World about two years ago, and I’ve been writing articles ever since. My main focus is automotive news, but I’ve also written about politics, lifestyle, and entertainment.
