Core PCE Data: Results Below Expectations

Core PCE Data Falls Below Expectations

The Core PCE data, one of the hot topics on the agenda in recent days, is drawing the attention of investors with the figures for September. This data, announced at %2.8, slightly below expectations, was set at %2.9 last month. These figures observed on an annual basis provide a critical insight for the Federal Reserve (Fed).

Monthly Increase and Inflation Target

On a monthly basis, a 0.2% increase was recorded according to the data. This indicates that price pressures have not shifted and that the inflation level continues to remain above the Fed’s target of %2. The risk of persistent inflation continues to be a critical element for monetary policy.

Rate Cut Expectations and Market Reactions

The fact that the Core PCE data did not produce a surprise this month did not hinder the possibility of a rate cut by the Fed in the upcoming meeting. However, the weakening growth outlook and loss of momentum in employment indicate that the economy's resistance to high interest rates is decreasing. Therefore, the Fed may be forced to implement a rate cut in an environment where inflation is not easing quickly.

Initial Market Reactions

Following the data, initial market reactions remained moderate. Given that it is a lagging indicator, U.S. indices maintain their flat positive trend. This suggests that the market has assessed the received data as not affecting the Fed's decisions. The probability of a 25 basis point cut remaining at %87 in the upcoming Fed meeting keeps the expectations alive among investors.

FOMC Meeting and Future Expectations

Another important factor for the Fed is the dot plot forecasts that will be announced at the FOMC meeting scheduled for December 10. The fact that officials emphasize the weakness in the labor market rather than inflation indicates that a single inflation data point will not radically change the policy stance. However, high levels of Core PCE in the coming months could change projections for next year.

This information does not constitute investment advice. Please be careful when making your investment decisions.