The Federal Reserve's preferred inflation gauge, the core PCE index, rose 0.2% in September, lifting its annual pace to 2.8%, according to data released on Friday - with several weeks of delay due to the recent shutdown. This figure came in slightly below market expectations of 2.9% and reinforces hopes for upcoming monetary easing from the Fed.
The overall PCE index also increased by 0.3% month-over-month, bringing the annual inflation rate to 2.8%, in line with consensus. These figures suggest a gradual slowdown in inflation pressures, as the central bank seeks to return inflation to its 2% target without unduly hampering economic activity.
The report also included data on household incomes and spending: personal income rose 0.4%, modestly above expectations, while spending rose 0.3%, a slight retreat. The release was well received by markets, which extended their gains as investors now priced in a 25bp cut to the policy rate at the Federal Reserve meeting expected Wednesday.
