Fed's Preferred Inflation Gauge Hits 2.3%, Meets Expectations

November 28, 2024: The core Personal Consumption Expenditure (PCE) price index, the Federal Reserve’s preferred inflation gauge, increased by 2.3% annually in September 2023, meeting economists’ expectations. This figure represents a slight uptick from the previous month’s reading of 2.2%.

While the headline PCE price index, which includes volatile food and energy costs, also rose to 2.3% year over year, policymakers closely watch the core PCE index as a more reliable indicator of underlying inflationary trends.

The persistence of elevated inflation has prompted the Federal Reserve to maintain a hawkish monetary policy stance. The central bank has implemented a series of interest rate hikes to combat inflation and cool down economic activity. However, concerns remain about the potential recession as interest rates rise.

The Federal Reserve’s ongoing efforts to tighten monetary policy aim to reduce demand and ease price pressures. However, the effectiveness of these measures in curbing inflation without triggering a significant economic slowdown remains uncertain.

As the Federal Reserve continues to navigate a challenging economic landscape, investors and policymakers will closely monitor inflation data and other economic indicators to assess the outlook for interest rates and economic growth.

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