Fed’s preferred gauge showed core inflation at 3.0% in August, much lighter than expected
The personal consumption expenditures price index was expected to show an annual gain of 3.7% on headline and 3.3% for core, according to the Dow Jones consensus. However, core inflation was actually 3.0% in August.
The US Dollar and Treasury yields retreated as traders reduced bets on another Federal Reserve interest-rate hike in October following comments from New York Fed President John Williams. Markets now see a 43% chance of an October rate hike, down from around 70% earlier in the week.
Economists had forecast core and headline inflation to remain unchanged at 3.3% and 3.7% respectively. The core PCE Price Index was expected to rise 0.3% month-on-month in August, up from 0.2% in July, while headline PCE inflation was forecast to rise 0.4% month-on-month.
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