The rate of U.S. inflation is showing signs of a slowdown, although it is not decelerating as rapidly as earlier in the year.
Core PCE Price Gauge
The core PCE price gauge, which excludes food and energy and is considered a more reliable indicator of future inflation, is projected to increase by 0.3% in September, according to experts.
Headline PCE Index
The headline PCE index, which includes food and energy, is also expected to rise by 0.3%, as predicted by Wall Street analysts specializing in the DJIA.
Fed's Inflation Target
Ideally, the Federal Reserve would prefer inflation to rise no more than 0.1% to 0.2% per month.
Annual Rate of Core Inflation
The annual rate of core inflation is anticipated to slightly decrease from 3.9% to 3.7%.
Current Inflation Levels
While inflation has decelerated from its highest point in 40 years, which stood at 5.6%, prices are still increasing at a rate nearly twice as fast as the Fed's targeted inflation rate of 2%. It is expected that progress towards meeting this goal will be slow in the coming months.
Projection for the Fed's Inflation Target
The Federal Reserve itself does not expect to achieve its 2% inflation target until 2026.
Implications for Interest Rates
As long as inflation continues to slow, the likelihood of the Fed increasing interest rates diminishes. The central bank is expected to keep rates unchanged in its upcoming meeting, allowing for more time to evaluate the state of the economy.