US inflation continues to decline to 3.5% in October

Sherif Adel (Washington)

The Federal Reserve’s preferred indicator for measuring inflation continued its decline during the month of October, recording an increase of 3.5% compared to the same month last year, which increased the possibility of the bank fixing the interest rate on its funds during its next meeting, which is expected to be held over the course of 12-13 days. This December.
In a statement issued in Washington, D.C., on Thursday, the US Department of Commerce said that the personal consumption expenditures price index, which excludes highly volatile food and energy prices, came in line with expectations, rising by 0.2% compared to last month, and indicated that the core inflation rate for the 12-month period… A month recorded 3%.
Despite the interest of most observers in the consumer price index issued by the Department of Labor, and they see it as the most representative of the rate of price rise, the US Central Bank tends to prefer the core personal consumption expenditures index, as it better reflects what people actually spend, which highlights the change in Consumer behavior, with price fluctuations.
During recent weeks, coinciding with the release of data confirming a decline in inflation and a calm labor market, stock and bond markets reflected the increasing possibility that the highest interest rate hike cycle in America in four decades was approaching its end, which was translated as evidence of stabilizing interest rates at the December meeting. The prices of forward and future contracts currently show that traders are likely to cut interest rates five times next year, at a value of a quarter of a percent each time, and the markets also show a high probability that the bank will make the first cut before the middle of the year.
After raising interest 11 times, starting from the first quarter of last year, with a total value of 5.25%, interest rates on Federal Reserve funds, which are the basic interest rates in the country, stabilized at a range of 5.25% to 5.5%, which is their highest level in more than 22 years. years.
The Federal Reserve fixed interest rates in its last two meetings, as the latest economic data seemed to confirm that US inflation is heading towards the Federal Reserve’s target, which has been estimated at two percent for more than ten years. Recently, some hawkish Federal Reserve members have indicated their satisfaction with what has been achieved in the face of stubborn inflation.
Christopher Waller, a member of the Federal Reserve, said on Tuesday that he “feels increasingly confident that monetary policy is currently well positioned to slow the economy and return inflation to 2%.”
Waller pointed to a variety of areas where economic activity has moderated, from manufacturing to the labor market, through to retail sales. Waller was known for his hawkish tendencies, as he announced on more than one occasion his preference for tightening monetary policy and maintaining higher interest rates for extended periods.