US PCE Price Inflation Ticks Higher in October, As Expected

• Inflation edged higher in October as the Federal Reserve is looking for clues on how much it should lower interest rates, the Commerce Department reported.
• The personal consumption expenditures price index, a broad measure the Federal Reserve prefers as its inflation gauge, increased 0.2% in October and showed a 12-month inflation rate of 2.3%. Both were in line with the Dow Jones consensus forecast, though the annual rate was higher than the 2.1% level in September.
• Excluding food and energy, core inflation showed even stronger readings, with an increase of 0.3% on a monthly basis and an annual reading of 2.8%. Both also met expectations. The annual rate, however, was 0.1 percentage points above the prior month.
• Fed policymakers target inflation at a 2% annual rate. PCE inflation has been above that level since March 2021 and peaked around 7.2% in June 2022, prompting the Fed to go on an aggressive rate-hiking campaign.
• While the inflation rate has dropped significantly since the Fed started tightening, it remains a nettlesome problem for households and figured prominently in the presidential race.
• According to traders December remains in play, but further rate cuts in 2025 are fading as policy gets closer to neutral. “Today’s data shouldn’t change views of the likely path for disinflation, however bumpy. But a lot of observers, probably including some at the Fed, are looking for reasons to get more hawkish on the outlook given the potential for inflationary policy change like new tariffs.”

(Sources: CNBC & Reuters)