What To Expect From Friday's Inflation Report

Core Inflation Insights - Core PCE inflation is projected to have risen 2.9% in September, moving away from the Federal Reserve's target of a 2% annual rate [1] - The Personal Consumption Expenditures index is expected to show a 2.8% increase over the 12 months ending in September, up from 2.7% in August, marking the highest level since April 2024 [1] - If the report aligns with expectations, it would indicate that core PCE inflation has exceeded the Fed's target for 55 consecutive months [1] Economic Implications - Inflation has been a persistent issue since 2021, with forecasts suggesting it will not return to pre-pandemic levels in the near future [1] - The upcoming report was delayed due to a government shutdown, but if it meets expectations, it will reflect similar annual increases as the Consumer Price Index for September [1] - Economists at Bank of America predict core PCE inflation will remain above 3% through Q3 2026 and above 2% through 2027 [1] Federal Reserve's Response - Despite ongoing inflation concerns, the Federal Reserve is expected to cut interest rates to support the struggling job market [1] - The Fed has maintained high rates to curb inflation but faces pressure to lower them to stimulate hiring amid a slowdown in job growth [1] - Recent discussions among Fed officials highlight the conflicting pressures of maintaining low inflation and high employment, influencing the direction of interest rates [1]