OCTOBER 14, 2024 – INFLATION SLOWS IN SEPTEMBER
The US inflation was 2.4 percent annually for September, the lowest increase since inflation took off in 2021. Month over month prices were up 0.2 percent, the same as seen in August. Core inflation remained elevated, up 3.3 percent for the year, and up 0.3 percent from August. Overall, it seems inflation is trending down to the Fed’s 2 percent target, albeit in a non-linear manner.
But rate cuts are not a certainty, as the last employment data was much stronger than expected, raising inflation concerns going forward. The minutes from the Fed’s September meeting showed the policy makers were not completely in agreement with the half-percent rate cut. A unspecified number of officials thought last month’s decision was too aggressive, given the solid economic activity, low unemployment and inflation that remains above target levels.
The Fed wants a deliberate and gradual transition to lower rates, which means we should not expect more than 25 basis point reductions going forward. Core inflation remains well above the Fed’s target. Investors still widely expect a quarter of a percent decrease at the November meeting.