Core PCE Data: Results Below Expectations

Core PCE Data Falls Below Expectations

One of the hot topics on the agenda in recent days is the Core PCE data, which has caught the attention of investors with the figures for September. This data, announced at a slightly lower than expected rate of %2.8, was determined to be %2.9 the previous month. These figures observed on an annual basis provide critical insight for the Federal Reserve (Fed).

Monthly Increase and Inflation Target

Based on the data, a monthly increase of %0.2 was recorded. This indicates that price pressures have not shifted and that the inflation level continues to remain above the Fed's %2 target. The risk of sticky inflation remains a critical factor in monetary policy.

Interest Rate Cut Expectations and Market Reactions

The fact that the Core PCE data did not produce any surprises this month did not prevent the Fed from possibly cutting interest rates in its upcoming meeting. However, the weakening growth outlook and declining employment indicate that the economy's resistance to high interest rates is diminishing. Therefore, the Fed may be forced to cut rates in an environment where inflation is not rapidly easing.

Initial Market Reactions

Following the data, initial reactions in the markets remained at moderate levels. Due to the lagging nature of the data, U.S. indices are maintaining a flat positive trend. This indicates that the market is assessing the data in such a way that it will not impact the Fed's decisions. The likelihood of a 25 basis point cut remaining at %87 ahead of the upcoming Fed meeting sustains expectations among investors.

FOMC Meeting and Future Expectations

Another important factor on the Fed side is the dot plot forecasts to be announced at the FOMC meeting scheduled for December 10th. Officials emphasizing the weakness in the labor market over inflation suggests that a single inflation data point will not radically change the policy stance. However, if the Core PCE remains high in the coming months, it may alter expectations for the following year.

This information does not constitute investment advice. Please exercise caution when making investment decisions.