For the second month in a row, the Federal Reserve’s preferred inflation gauge is expected to show that prices rose more sharply in October. This makes it even less clear how much the central bank will lower interest rates.
It is expected that the PCE price index will go up 0.2% in October, the same amount as it went up the previous month. Also, the yearly rate of inflation could rise from 2.1% to 2.3%, which would move the Federal Reserve a little farther from its goal of 2%.
The report comes out on Wednesday at 10 a.m. Eastern time instead of 8:30 a.m. Government economic numbers are coming out all at once the day before Thanksgiving, which is why the time change.
The “core PCE index,” on the other hand, is projected to rise 0.3% for the second month in a row. The core rate doesn’t include the fact that food and energy prices change all the time.
The 12-month core rate, which has been stuck at 2.7% since July, could also go up to 2.8%.
The Fed is more worried about the rise in the core rate because it shows more about whether prices will go up in the future. When compared to the main PCE measure, it is much farther from the Fed’s goal of 2% inflation.
However, most experts think that the most recent spike in inflation will only last for a short time. Or what the Fed calls “bumps.”
It’s not as clear when inflation will start to go down again and get closer to the Fed’s goal of 2%.
The Fed doesn’t think it will reach its goal until 2026, but officials are hoping that inflation will start to drop again by early next spring.
