Fed’s Key Inflation Measure Likely Stayed Above-Target In October | Global News Avenue

The Federal Reserve’s preferred inflation gauge may remain uncomfortably hot in October, but may not be enough to derail an expected move by the central bank to cut interest rates again in December, according to forecasts.

Forecasters expect a report on Wednesday from the Bureau of Economic Analysis to show that the cost of living, as measured by personal consumption expenditures, rose 2.3% over 12 months in October, according to a survey of economists. Dow Jones Newswires and wall street journal. That would be up from September’s annual growth rate of 2.1%.

If forecasts are accurate, the rise would be reflected in a separate measure of inflation, the consumer price index, which also Shows rising inflation Year over year in October.

“Core” inflation, which excludes food and energy price swings, is expected to rise 2.8% for the full year, up from 2.7% in September. Economists and policymakers keep a close eye on core inflation measures because food and energy prices can fluctuate for reasons unrelated to broader inflation trends.

Stubborn inflation complicates interest rate outlook

If inflation rises, it will deviate from the Fed’s annual target of 2%. That could have implications for monetary policy and interest rates, as central bankers focus more on personal consumption spending than other inflation measures.

The Fed lowered interest rates in September from a two-decade high, followed by Another interest rate cut in November. However, interest rates remain high by historical standards, making borrowing costs continue to rise for all types of credit, including credit cards and auto loans.

The Federal Reserve has kept interest rates high to curb a surge in inflation in 2022 as the economy recovers from the pandemic. With inflation falling steadily this year, Fed officials feel confident enough to begin cutting interest rates. The cuts are intended to encourage more borrowing and spending, boost the economy and prevent severe job losses.

But inflation has remained stubbornly above target, while the jobs market has stay flexibleprompting officials including Federal Reserve Chairman Jerome Powell to say they are No rush Make more cuts.

On Monday, financial market participants put a 53% chance that the Federal Reserve would cut interest rates by 0.25 percentage point in December, lowering the range to 4.25% to 4.5% based on federal funds futures trading data.

The housing market is the main reason for high inflation.

Rising housing costs push up overall inflation, as housing is a major contributor to the cost of living and dominates most household budgets.

Economists expect housing cost increases to slow in future official reports. They predict government data will begin to reflect House price growth slows Other measures recorded in recent years.