U.S. core PCE inflation index expected to rise by 3.5% in October
Eurozone also projected to see its lowest inflation rate since 2021
Progress in disinflation… no interest rate hikes expected this year
As the inflation indicators in the U.S. and Europe are expected to show the lowest annual increase since early to mid-2021, the market’s view that there will be no additional interest rate hikes is gaining strength.
According to Bloomberg on the 25th (local time), the Personal Consumption Expenditures (PCE) price index in the U.S. for October is expected to have risen 3.1% compared to the same month last year. The core PCE inflation index, excluding volatile energy and food, is expected to have increased by 3.5% over the same period. This indicator, which is one of the most important for the Federal Reserve (Fed), is scheduled to be announced on the 30th.
The inflation rate in the Eurozone (20 countries using the Euro) for November, which will be announced on the same day, is expected to be the lowest since July 2021 at 2.7%. The core inflation rate is also expected to have slowed to 3.9%.
Bloomberg diagnosed that both the U.S. and Europe have made progress in disinflation, which means a slowdown in inflation. However, central banks around the world are still cautious about halting tightening. Christine Lagarde, President of the European Central Bank (ECB), said on the 24th, “Now is not the time to declare victory in the fight against inflation.” Jerome Powell, Chairman of the Fed, also showed a cautious attitude, saying, “There is still a long way to go, and it is too early to declare victory.”
Experts and the market believe that if the current trend continues, the Fed will not be able to implement additional interest rate hikes. Bloomberg reported, “As the inflation impulse in October slows down, the Fed will freeze interest rates until the end of the year.”
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