(Bloomberg) — The latest US inflation data suggests a slowdown at the end of the third quarter, which is likely to ease concerns for the Federal Reserve as it focuses more on supporting the labor market.
The Consumer Price Index is expected to show a modest 0.1% increase in September, marking its smallest gain in three months. Year-on-year, the CPI is projected to have risen by 2.3%, the slowest pace since early 2021. The Bureau of Labor Statistics will release the CPI report on Thursday.
The core inflation rate, which excludes volatile food and energy prices, is forecasted to rise by 0.2% from the previous month and by 3.2% compared to September 2023.
Following the strong job growth reported in September, the gradual slowdown in inflation indicates that policymakers may opt for a smaller interest rate cut at their next meeting on Nov. 6-7.
Fed Chair Jerome Powell has indicated that projections suggest quarter-point rate cuts at the final two meetings of the year.
The CPI and Producer Price Index data inform the Fed’s preferred inflation measure, the Personal Consumer Expenditures Price Index, which will be released later this month.
According to Bloomberg Economics analysts, the September CPI report is expected to show subdued headline inflation but a more robust core reading. The core inflation is likely to align with the Fed’s 2% target, affirming the belief that inflation is on a downward trend.
Looking ahead, central banks from New Zealand to South Korea are expected to consider rate cuts, while France will unveil its budget, and the European Central Bank will publish minutes of its September policy meeting.
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