US Inflation Accelerates, December Rate Hike Bets Strengthen

US inflation accelerated again in September, strengthening the case for the Federal Reserve to consider another interest rate hike in December after keeping rates unchanged this week.

The Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, rose 0.5% month-on-month in September and increased 3.6% from a year earlier. The figures confirmed that inflation remains well above the Fed’s 2% target.

Meanwhile, Core PCE, which excludes food and energy prices, increased 3.1% on an annual basis. On a monthly basis, Core PCE rose 0.3%, matching the increase recorded in August.

The inflation data came a day after Fed officials voted 10-2 to keep interest rates unchanged. Two policymakers favored a rate increase, while markets continue to expect another possible hike at the central bank’s final meeting of the year in December.

Inflationary pressure this year has also been fueled by an energy crunch linked to the conflict with Iran, which disrupted energy flows through the Strait of Hormuz and pushed oil prices higher. Fed Chair Kevin Warsh said the US economy remains strong but acknowledged that inflation is still elevated, giving policymakers room to gather more data before deciding on their next move.(mrv)

Source : Newsmaker.id