PCE Inflation Persists, Markets Bet on More Fed Rate Cuts

Inflation Persists, but Markets Hope for More Rate Cuts

Consumer Prices Edge Up, Keeping Fed on Track for More Rate Cuts

Inflation edged higher in October, but consumers balance sheets remained healthy as per personal income and outlays data showed solid spending and rising incomes.

The PCE price index climbed by 0.2% for the month of October. The index climbed by 2.3% over the past year, matching economists’ forecasts. Inflation, however, continues to be above the Fed’s 2% target.

Core inflation, which excludes volatile food and energy prices, still showed a slightly more substantial increase. Core PCE rose by 2.8% year-over-year.

The rise in price increases was driven by higher costs of services that were partially offset by a decline in prices for goods!

Federal Reserve policymakers aim for a 2% annual rate. Since March 2021, the PCE index has remained above that target, peaking at 7.2% in June 2022, leading the Fed on an aggressive campaign to increase interest rates against soaring inflation.

The report shows how the Fed’s moves have slowed but not quite stopped the rise in the cost of purchasing goods and services. While inflation has slowed down significantly since the Fed began raising interest rates.

Stocks experienced mixed responses, with the Dow Jones Industrial Average closing up by about 100 points. However, the S&P 500 and Nasdaq Composite closed the day in the red.

Treasury yields decreased, indicating anticipation that the FOMC was on track to continue existing patterns in November

Investors expect, with a rate cut in December stacked at 66%, according to the CME Group’s FedWatch tool on bond market voices a decrease in the remainder of the year

While the PCE figure presents the Fed’s preferred gauge, inflation persists, compelling consumers on to expenses.

October showed seen in the last twelve months.

October showed a rise of 0.4% for similar to the downtrend that began

October showed a rise of 0.4%, closely matching economists’ forecasts. While the annual rate is above the target set by the Federal Reserve, the gains are more muted than the rapid price increases frequently appearing in 2021 and the first half of 2022.

Despite continued

incomes gained 0.6%, significantly topping the 0.3% estimate predicted by forecasters, representing the economic activity

the lowest since January.

in October indicated confidence but that increases will lessen the need for further enactment of decreased.

How has the market ⁢reacted to the recent inflation numbers?

## ⁣ ⁢Inflation Persists, but⁣ Markets Hope for More⁢ Rate Cuts

**Interviewer:** Joining‍ us today to discuss the latest inflation numbers and their‌ potential impact ‍on interest rates is Dr.⁣ Emily Carter, an economist at ⁤ [University Name]. Dr. Carter, thank you‍ for being here.

**Dr. Carter:** Thank you for having⁣ me.

**Interviewer:** Let’s jump right in. We saw that inflation edged up slightly in October. While it’s still above the Fed’s ⁢target of 2%, it seems the ‍market is⁤ reacting positively, anticipating more rate cuts.‌ How do you interpret ⁤this?

**Dr. Carter:** That’s ‍correct. The PCE price‌ index, a key inflation measure ⁢favored by ​the Fed,‌ did ⁤increase by 0.2% in October, bringing ⁣the year-over-year increase to 2.3%. While this is‌ slightly higher than the Federal Reserve’s target, it’s encouraging to see inflation moderating compared to ⁢its peak in June ​2022. The market reaction ⁢you mentioned suggests that investors believe the ⁣Fed is successfully maneuvering⁣ towards its inflation goal and might soon ease off its aggressive tightening stance. [[1](https://www.nytimes.com/live/2024/09/18/business/fed-interest-rates)]

**Interviewer:** It’s interesting that core inflation, which excludes volatile food and energy prices, rose by 2.8% year-over-year. Is this a concern?

**Dr. Carter:** It’s a signal that underlying inflationary pressures are ⁣still present. The rise in core PCE suggests that we may need to keep a close eye on the sustainability of this downward‌ trend in inflation.

**Interviewer:** What are your thoughts on the potential for more ‌rate cuts by the ⁢Federal Reserve?

**Dr. Carter:** It’s certainly possible. The Fed’s recent announcements indicate a data-dependent approach, meaning they’ll be closely monitoring economic indicators like inflation and ⁤employment ⁢to guide future decisions. If inflation continues to moderate and economic growth cools as expected, we could see further interest rate cuts in the coming months.

**Interviewer:** Thank you for ‍your insights, ‍Dr. Carter. It seems the ⁤economic landscape remains​ complex, but your analysis provides valuable context for understanding the recent developments.

‌ **Dr. ‍Carter:**​ My pleasure.