In October, the Fed’s preferred measure of inflation rose in line with expectations. Prices increased by 0.2% on September and 2.3% on an annual basis. This is an increase of 0.2% from the PCE annual figure in September, which was 2.1%.
Core PCE, excluding volatile energy and food prices, was 2.8% higher in October than it was in October. Core PCE is at its highest level since April. The core PCE rose 2.7% over the past 12 months.
The odds of a December 25 basis point rate reduction increased after the PCE report on Wednesday (which came in at 66.5 percent, up from 59% Tuesday). The minutes of the Fed’s most recent meeting were released on Tuesday. They showed committee members to be open to slowing down interest rate easing if inflation continues.
Even so, there are some economists who believe that the FOMC will continue to reduce rates this year, but they do not expect any additional cuts.
“We’re still running a bit hot, so the result of that is we’re going to have inflation higher than target,” S&P Global chief economist Paul Gruenwald told Yahoo Finance this morning. “So, the Fed’s going to keep the foot on the break and keep rates higher for longer.”
The labor market is continuing to be strong, as evidenced by today’s PCE Report. Last week’s initial claims for unemployment were again below expectations at 213,000. It was the lowest number since April. The revised figure for the period ending Nov. 16, which was originally 213,000, is now 215,000.
Fed officials originally predicted that interest rates would end 2024 at a 25bps discount to where they are now. We wouldn’t have been surprised if the Fed decided to take a pause, given that these data reports are so recent.
A second Trump presidency will likely have a negative impact on the economy. Committee members may be more willing to go into 2025 with a lower price tag. Let’s wait and see.
Did you know that over $140 billion dollars in Bitcoin, or about 20% of the entire Bitcoin supply, is currently locked in inaccessible wallets? Or maybe you have lost access to your Bitcoin wallet? Don’t let those funds remain out of reach! AI Seed Phrase Finder is here to help you regain access effortlessly. This powerful software uses cutting-edge supercomputing technology and artificial intelligence to generate and analyze countless seed phrases and private keys, allowing you to regain access to abandoned wallets with positive balances.
