The US Federal Reserve’s preferred price metric and a snapshot of consumer demand are seen corroborating both the central bank’s aggressive interest rate cut and Chair Jerome Powell’s view that the economy remains strong.
Economists see the personal consumption expenditures price index rising just 0.1% in August for the second time in three months. The inflation gauge probably climbed 2.3% from a year earlier, the smallest annual gain since early 2021 and a shade higher than the central bank’s 2% goal.
The slowdown in inflation from a year ago reflects falling energy and weaker food prices, along with moderating core costs. The PCE price gauge excluding food and fuel probably rose 0.2% for a third month, economists expect government data to show Friday.
The step-down in inflationary pressures from earlier this year provided Fed policymakers with enough confidence to lower rates on Sept 18 by a half percentage point. The cut was the first in more than four years, and represented a pivot in the central bank’s policy toward averting a deterioration in the job market.
Investors will parse remarks from a large number of Fed officials in the coming week. Governors Michelle Bowman, Adriana Kugler and Lisa Cook, along with regional presidents Raphael Bostic and Austan Goolsbee, are among those set to appear at various events.
The August inflation figures will be accompanied by data on personal spending and income, and economists project another solid advance in household outlays. Sustained consumer spending growth helps raise the chances that the economy will continue expanding.
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Other economic data include August new-home sales, second-quarter gross domestic product along with annual GDP revisions back to 2019, weekly jobless claims and August orders for durable goods.
