US consumer prices rose slightly more than expected in September, but the annual increase in inflation was the smallest in more than three and a half years, which could keep the Federal Reserve on track to cut interest rates again next month.
The Labor Department’s Bureau of Labor Statistics said Thursday that the consumer price index rose 0.2 percent last month after rising 0.2 percent in August. In the 12 months to September, the CPI rose 2.4 percent. This was the lowest year-on-year rise since February 2021 and comes after a 2.5 percent increase in August.
Economists polled by Reuters had expected the consumer price index to rise by 0.1 percent and 2.3 percent on an annual basis. The annual increase in inflation has slowed from its peak of 9.1 percent in June 2022.
Combined with the US central bank’s significant moderation of inflation measures to its 2 percent target, this allowed the Fed to shift focus to the labor market and deliver an unusually large interest rate cut of 50 basis points in September.
Minutes of that The meeting has been published Wednesday showed that a “large majority” of policymakers support the beginning of an era of easier monetary policy, but there appears to be broader agreement that the initial move will not commit the Fed to any particular pace of future interest rate cuts.
The first rate cut since 2020 brought the central bank interest rate down to a range of 4.75 percent-5.00 percent. The Fed raised interest rates by 525 basis points in 2022 and 2023.
Get daily national news
Get the day’s top political, economic and current affairs news, headlines, delivered to your inbox once a day.
Labor market flexibility Solid consumer However, the spending has forced investors to abandon their hopes of another interest rate cut by half a percentage point next month.
Economics added Most jobs In six months in September the unemployment rate fell to 4.1 percent from 4.2 percent in August. Reviews for National accounts Last month’s data from 2019 through the second quarter of this year also showed that the economy was in much better shape than previously expected.
There are also some pockets of instability, particularly rents, that are slowing the pace of cooling in core inflation.
Excluding the volatile food and energy components, the CPI rose 0.3 percent in September after rising 0.3 percent in August. In the 12 months to September, the so-called core CPI rose 3.3 percent. This followed a 3.2 percent increase in August.
Early Thursday, financial markets saw a roughly 76 percent probability of a 25 basis point rate cut at the Federal Reserve’s Nov. 6-7 monetary policy meeting, according to CME Group’s FedWatch tool. The probability of interest rates not changing was about 24 percent.
