The U.S. October PCE is expected to show inflation stickiness, which may strengthen the Federal Reserve's strategy to slow down easing

Zhitong
2024.11.24 23:05
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The U.S. October PCE price index will be released on November 27, with an expected year-on-year increase of 2.3% and a core PCE increase of 2.8%. This will indicate persistent price pressures, reinforcing the Federal Reserve's cautious stance on future interest rate cuts. The market expects personal spending to grow by 0.4% month-on-month and personal income to grow by 0.3%. Federal Reserve officials have stated that a rate cut in December is not certain, and economic risks are diminishing. Investors are focused on the minutes of the November monetary policy meeting to gauge the willingness for rate cuts

According to Zhitong Finance APP, the U.S. October PCE price index data will be released at 8:30 PM Beijing time on November 27 (Wednesday). This inflation data favored by the Federal Reserve is expected to show persistent price pressures and will reinforce the Fed's cautious stance on future interest rate cuts.

The market currently expects the U.S. October PCE price index to rise 2.3% year-on-year, up from 2.1% in September; it is anticipated that the core PCE price index for October, excluding food and energy, will rise 2.8% year-on-year—this would be the largest year-on-year increase since April, and higher than the previous value of 2.7%, with a month-on-month increase of 0.2%—unchanged from the previous value.

At the same time, other data to be released on the same day is expected to show resilience in consumer spending and stable income growth. The market currently expects U.S. personal spending in October to increase by 0.4% month-on-month, down from the previous value of 0.5%; it is expected that U.S. personal income in October will increase by 0.3% month-on-month, unchanged from the previous value.

Although Federal Reserve policymakers will receive U.S. November CPI and PPI data before the policy meeting on December 17-18, they will not receive U.S. November PCE data when discussing whether to cut interest rates.

Economist Anna Wong and others stated: "Recent discussions by several Federal Reserve officials regarding the U.S. economic situation echoed a theme recently raised by Fed Chair Powell—that a rate cut in December is not a foregone conclusion, and given that economic risks are receding, the central bank can slow down the pace of easing."

In addition to the October PCE, personal spending, and income data, other economic data to be released on Wednesday includes: the revised annualized quarterly rate of U.S. real GDP for the third quarter, the preliminary month-on-month durable goods orders for October, and the number of initial jobless claims for the week ending November 23.

Furthermore, the Federal Reserve will release the minutes of the November monetary policy meeting at 2:00 AM Beijing time on November 27. Investors will attempt to gauge policymakers' willingness to cut rates next month from these minutes. As of last Friday, market participants believed that the likelihood of the Federal Reserve cutting rates by another 25 basis points next month was slightly above 50%

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