In October, US core inflation as measured by the Fed’s preferred core PCE index rose 5% year-on-year, as expected, slowing from 5.2% in September. revised upwards from +5.1% initially disclosed).
On a monthly basis, the core PCE rose by 0.2%, slower than the estimated +0.3% and weakening compared to the previous increase, in September, equal to +0.5%.
The PCE headline index rose 6% year-on-year, below an estimated +6.2% and +6.2% previously.
On a monthly basis, the increase was 0.3%, less than the +0.5% expected and compared to the previous +0.3%.
The numbers support the views of those who believe that US inflation has peaked and that Jerome Powell’s Fed could launch less aggressive rate hikes.
It was Jerome Powell himself who said yesterday, in a speech at the Brookings Institution, that “it makes sense to moderate the pace of interest rate hikes”.
Powell added that the intensity of the Federal Reserve’s monetary tightening could be moderated as early as the next meeting of the FOMC (the monetary policy arm of the US central bank), scheduled for December 13 and 14.
The head of the US central bank spoke of “significant progress” that the Fed has made “in making (monetary) policy sufficiently restrictive”.
Of course, “there is still work to be done” and “there is likely to be a need to maintain the restrictive policy for some more time”, in order to fight inflation.