US Fed's Favored Inflation Gauge Slows In October

A key inflation measure used by the US Federal Reserve to set interest rates eased further last month amid declining energy and goods prices, according to government data published Thursday

Washington, (UrduPoint / Pakistan Point News - 1st Dec, 2023) A key inflation measure used by the US Federal Reserve to set interest rates eased further last month amid declining energy and goods prices, according to government data published Thursday.

The annual personal consumption expenditures (PCE) price index rose 3.0 percent in October, down 0.4 percentage points from a month earlier, the Commerce Department said in a statement.

Stripping out volatile food and energy prices, so-called core inflation also slowed to an annual rate of 3.5 percent, which was in line with the median expectation of economists surveyed by MarketWatch.

Personal incomes also slowed last month to rise by 0.2 percent from September.

The release will provide welcome news for the Fed, which recently held its key lending rate at a 22-year high as it aims to return inflation firmly to the long-term target of two percent without triggering a damaging recession.

Cutting inflation while avoiding a downturn, commonly known as a "soft landing," is challenging to pull off, but policymakers at the US central bank have sounded increasingly optimistic they can succeed this time around.

A Fed survey published Wednesday indicated the US economy is slowing, and the job market is cooling, providing further signs of a possible soft landing ahead.

"The core inflation threat is receding faster than the Fed expected, and likely will continue to do so," Pantheon Macroeconomics Chief Economist Ian Shepherdson wrote in a note to clients.

While Fed Chair Jerome Powell is likely to keep the threat of another interest rate hike alive at the next rate decision in mid-December, "the market has moved on and won't be listening," Shepherdson continued, adding he expected multiple rate cuts next year.