PCE report: Inflation data cools in September – how will it affect the December Fed interest rate decision?

PCE report: Core inflation, a key measure closely monitored by the Federal Reserve, came in slightly cooler than expected in September, according to delayed federal data, offering a potential boost to US president Donald Trump’s push for faster interest rate cuts, as per a report.

Inflation Data Today Strengthens Case for Fed Rate Cuts

The Fed’s rate-setting committee is scheduled to meet on December 9 and 10, and the softer inflation data strengthens the argument for another reduction in rates, as per a Newsweek report.

PCE Report Today: Core Inflation Cools Slightly in September

According to the Bureau of Economic Analysis, core prices rose 2.8 percent in September compared with the same month last year, down from 2.9 percent in August. While the dip is modest, it fell slightly short of market expectations.


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What the Latest PCE Report Tells About US Price Trends

The core measure, which excludes volatile items such as food and energy, is the Fed’s preferred gauge of underlying inflation. By stripping out these unpredictable components, it provides a clearer picture of price trends affecting the broader economy.

The release of Friday’s inflation data was delayed by five weeks due to the federal government shutdown, which lasted 43 days, the longest in US history.

PCE Report Shows Inflation Still Above Fed Target

Despite the slight cooling, inflation remains above the Fed’s 2 percent target. Trump’s tariffs have contributed to elevated prices, though Fed officials note that other factors, such as weak hiring, modest economic growth, and slowing wage gains, are likely to gradually ease inflation in the coming months.

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Inflation Data Today: Market Expectations vs Actual Numbers

The Commerce Department also reported that the personal consumption expenditures (PCE) index rose 0.3 percent in September from the previous month and was up 2.8 percent from a year earlier, in line with estimates from LSEG economists. Core PCE increased 0.2 percent month over month and 2.8 percent year over year, matching monthly expectations and slightly cooler than anticipated on the annual measure.

How Inflation Data Influences the Fed’s December Meeting

The data sets the stage for the Fed’s December meeting, with policymakers weighing the latest inflation trends as they decide on the path for interest rates.

FAQs

What did the latest PCE data show for September?

Core PCE prices rose 2.8% year over year and 0.2% month over month, slightly cooler than expected.



How does this inflation data affect the Fed?

Softer inflation strengthens the case for a potential interest rate cut at the December 9–10 meeting.