Fed's preferred inflation accelerates in September and reinforces caution on interest rates
The index that the Fed watches most rose 0.5% in September, the core accumulated an increase of 3.1% in 12 months and GDP and inflation came out together.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM MONEY TIMES · 2 MIN
The inflation preferred by the Federal Reserve accelerated again. According to Money Times, the PCE index rose 0.5% in September and is up 3.6% for the year, far from the Fed's target of 2%. The data was released by the Bureau of Economic Analysis (BEA) on Thursday (29) and comes at a time when the American monetary authority needs to calibrate its interest rate strategy.
The more refined reading, which excludes food and energy, also rose. According to the same vehicle, the core PCE increased 0.3% in the month and reached 3.1% in 12 months, a level that remains above the target.
The picture is one of pause, not relief. According to MarketWatch, the Fed stopped interest rate increases, but prices remain under pressure. There is also a label divergence between the sources: the same 3.6% figure appears in MarketWatch as the annual US inflation rate, while Money Times describes it as year-to-date. The distinction matters, because the nine-month cumulative rate and the twelve-month rate are not equivalent measures.
The GDP and inflation data were published together, at 8:30 am Eastern Time, which forces the market to read them together. According to MarketWatch, the projection is that a strong GDP combined with pressured prices will reinforce the case for an interest rate hike in December.
In the market, gold retreated after the Fed maintained interest rates, according to Investing.com Brasil, which also highlights investors' focus on PCE inflation data.
What changes for the investor
Inflation that does not subside tends to keep interest rates high for longer. This scenario weighs on assets whose value depends on distant profits, such as technology shares traded on the Nasdaq, and also influences the dollar and fixed income, which react to the interest differential between countries. Isolated data does not define the direction of the market, and it is worth following the GDP report, the Fed's speeches and the next inflation reading before drawing conclusions.
Automatically translated from Portuguese.
