Analysts at the Bank of Montreal said revised U.S. inflation data came in softer than expected, offering some relief on expectations for another Federal Reserve rate increase in October. In a research note cited by BlockBeats on Sept. 30, the analysts pointed to the Bureau of Economic Analysis’ annual benchmark revisions, which showed a larger-than-expected downward adjustment in the Fed’s preferred inflation gauge, even though inflation remains well above the central bank’s 2% target.
They also said August core PCE, or the Personal Consumption Expenditures price index excluding volatile items, rose less than expected. The year-over-year increase slowed to 3%, below the market consensus of 3.3% and the Federal Reserve’s own 3.2% estimate. At the same time, the note said the U.S. economy is still expanding and private-sector hiring remains steady. Taken together, the analysts said, those factors have reduced the urgency of another rate hike in October to some extent.
Bank of Montreal analysts said in a research note on Sept. 30 that annual benchmark revisions from the U.S. Bureau of Economic Analysis, or BEA, showed a larger-than-expected downward adjustment in the Federal Reserve’s preferred inflation gauge, although inflation still remains well above the Fed’s 2% target.
August core PCE came in below expectations
The analysts said August core PCE, short for the Personal Consumption Expenditures price index, increased less than expected. Its year-over-year rate slowed to 3%, below the market expectation of 3.3% and also under the Federal Reserve’s own 3.2% estimate.
Growth and hiring remained firm
The note also said the economy is still expanding and private-sector hiring activity has remained steady. According to the analysts, those conditions, together with the downward revisions in inflation data, have eased the urgency of another rate hike in October to some extent.
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