The U.S. core PCE in October recorded the largest increase since April, supporting the Federal Reserve's cautious stance

The Zhitong Finance APP learned that the potential inflation indicator favored by the Federal Reserve accelerated its year-on-year rise in October, which helps explain policymakers' more cautious attitude towards interest rate cuts. Data released on Wednesday showed that the core PCE price index in the U.S. for October, excluding volatile food and energy prices, rose 2.8% year-on-year, the largest increase since April 2024, with market expectations also at 2.8% and a previous value of 2.7%; the core PCE price index rose 0.3% month-on-month in October, matching market expectations of 0.3% and the previous value of 0.3%.

In addition, the PCE price index in October rose 2.3% year-on-year, in line with market expectations of 2.3%, up from 2.1% in September; the PCE price index rose 0.2% month-on-month in October, consistent with market expectations of 0.2%, with the previous value in September also at 0.2%.

Economists stated that the core PCE price index rose at an annualized rate of 2.8% over three months, a metric that can more accurately reflect the trajectory of inflation. It is reported that the rise in the U.S. core PCE price index in October was due to an increase in service prices, reflecting a surge in portfolio management fees, which aligns with the rise in the stock market. Data showed that core service prices rose 0.4% month-on-month in October, the largest increase since March; core goods costs remained unchanged.

Although inflation still needs time to fall back to the Federal Reserve's 2% target, the future policy path of the Federal Reserve will become complicated due to the economic agenda of President-elect Trump.

Meanwhile, a series of other economic data were released on Wednesday. Personal spending in the U.S. rose 0.4% month-on-month in October. Driven by healthy growth in household and business spending, the initial annualized quarterly GDP growth rate for the third quarter in the U.S. was 2.8%. This data supports the recent remarks of many Federal Reserve officials that as long as the labor market remains healthy and the economy continues to progress, there is no rush to cut interest rates.

Economists will closely monitor "Black Friday" sales to gain further insight into consumer spending willingness. Retail giants Target, Best Buy, and Walmart have all extended holiday promotions to attract bargain-seeking consumers. However, it is worth noting that many consumers rely on credit cards and other loans to support their spending, with young consumers and low-income individuals showing signs of financial strain, such as rising delinquency rates