The US Federal Reserve’s preferred inflation index rose in August at the slowest monthly pace since late 2020, providing an excuse for monetary policy makers to abandon raising interest rates at their next meeting.
The core personal consumption expenditures price index, which excludes volatile food and energy components, rose 0.1 percent in August, according to Commerce Department data released Friday, which was lower than expectations for a 2.0 percent rise at the same level in July.
The overall personal consumption expenditures price index jumped 0.4 percent on a monthly basis in August, compared to 0.2 percent in July, reflecting the rise in energy costs.
On an annual basis, the price index for core personal consumption expenditures slowed by 3.9 percent, as expected, down from 4.3 percent in July, according to the updated data.
Maintaining low monthly core inflation readings is crucial to building confidence among Fed officials that they are winning the inflation battle and encouraging them to stop further rate hikes.
These developments could help further reduce inflationary pressures, but they also carry the risk of heading the economy toward recession.
During its last meeting, the US Federal Reserve kept interest rates unchanged, but indicated that it may raise interest rates further and is likely to keep them high for a longer period.
2023-09-29 13:24:17
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