PCE index, the Fed's preferred inflation measure, drops to 2.1%. Here's what it means for interest rates.
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The personal consumption expenditures (PCE) price index, the Federal Reserve's preferred inflation measure, dropped to 2.1% last month on an annual basis, close to the central bank's goal of a 2% annual rate. That could cement more rate cuts ahead in 2024, according to Wall Street economists.
September's PCE was in line with the median forecast from economists surveyed by Dow Jones Newswires and The Wall Street Journal, and represents a decline from August's 2.3% rate, according to Commerce Department data.
Given the surge in post-pandemic inflation, the fact that headline inflation now sits just a tenth of a percentage point away from the Fed's target is a significant achievement. Last month, the Federal Reserve made its first rate cut in four years amid signs that inflation was inching closer to its 2% goal, providing some welcome relief for consumers with credit card debt or who are in the market for a loan.
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