The core consumer price index increased 0.3% in September, slightly above forecast, leading to questions about whether the Fed will further slow the pace of interest rate reductions.
On a three-month annualized basis, the core PCE price index advanced 1.7%, the slowest this year, reinforcing the wisdom of Fed interest rate cuts next month.
This is an upward revision, reflecting stronger consumer spending on goods and services—particularly in healthcare, housing and utilities, and recreation.
"This doesn't challenge the idea we're still in an expansion, but it does signal we should expect monthly job growth to be more muted and put extra pressure on the Fed to cut rates."
Several big banks are projecting large negative revisions to Q1 jobs numbers, suggesting the labor market has been cooling for longer—and perhaps more dramatically—than originally thought.