SEPTEMBER 30, 2024 – PCE INFLATION LOWER THAN EXPECTED
The Fed’s preferred inflation gauge came in lower than expected in August. The personal consumption expenditures (PCE) price index indicates inflation is slowing, which opens the door for additional rate reductions this year. The PCE was up 0.1 percent for the month, or 2.2 percent annually. Excluding food and energy, the core PCE rose 0.1 percent in August, or 2.7 percent for the year. The data is the lowest reported since 2021.
Economists are encouraged as inflation is trending toward the Fed’s 2 percent target without triggering a recession. Economic growth and employment are slowing, but at a moderate pace.
The Federal Reserve recently lowered interest rates for the first time since 2020 by half a percent to a target range of 4.75 to 5 percent. At their most recent meeting, the Fed indicated a likelihood of another 50 basis points of cuts this year, and a full point reduction in 2025.