The latest measure of inflation recommended by the Federal Reserve showed that prices rose at a slower pace in August than expected on a monthly basis.
The core personal consumption expenditures (PCE) index, which subtracts the cost of food and energy, which is closely monitored by the Federal Reserve, rose 0.1% month over month during August, compared to Wall Street’s 0.2% expectations and the measured It fell below 0.2%. Seen in July.
Prices rose 2.7% in August over the same month last year, in line with Wall Street expectations and higher than July’s 2.6%. On an annual basis, overall PCE increased by 2.2%, the lowest annual growth rate since February 2021.
“We’ve had some pretty good inflation readings over the past few months, but that was on the back of an acceleration in inflation in the first quarter,” Tiffany Wilding, an economist at PIMCO, told Yahoo Finance. spoke. “So I think Fed officials have a pretty good feel about where inflation is.”
The report is the first to examine inflation since the Fed cut interest rates by 0.5 percentage point on September 18th. In a press conference after the decision, Powell said the Fed now has “greater confidence” in the path inflation will follow in accordance with the central bank’s policy. The goal is 2%.
Chairman Powell argued that further cooling of the labor market is as big a concern for the Fed as inflation.
Read more: How does the labor market affect inflation?
“The upside risks to inflation have actually declined, and the downside risks to employment have increased,” Powell said. “And because of our patience and persistence on cuts, I think we are now in a very good position to manage the risks to both objectives, even though inflation is coming down.”
Friday’s numbers come as investors are currently debating whether the Fed will cut interest rates by 25 or 50 basis points at its November meeting. Following Friday’s announcement, investors are pricing in a 54% chance of a 50 basis point rate cut, up from a 50% chance a week ago, according to the CME FedWatch tool.
Federal Reserve Chairman Jerome Powell speaks during a press conference at the Federal Reserve System in Washington, Wednesday, September 18, 2024. (AP Photo/Ben Curtis) (ASSOCIATED PRESS)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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