September PCE Report Shows Inflation at 2.1% as Prices Rise
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PCE Report Overview
The latest PCE report indicates that prices increased as expected, with annual inflation nearing the Fed’s 2% target.
Key Findings
- Prices rose by 0.2% month over month.
- Annual inflation for September was 2.1%, the lowest since February 2021.
- August's annual figure was revised to 2.3%.
- Core PCE, excluding food and energy, increased by 0.3% in September, with an annual rate of 2.7%.
Market Implications
The report did not significantly alter rate cut expectations for November, with a 95% chance of a 25-basis point cut according to CME Group data. Speculation for a December cut is less certain, with a 72% likelihood.
Current FOMC projections suggest interest rates will be 50bps lower by the end of 2024. However, investor confidence in these projections remains low.