US August Core PCE Rises 3% Year-on-Year, Below Expectations and Eases Urgency for October Rate Hike

Montreal Bank analysts pointed out in a research report that the U.S. Bureau of Economic Analysis (BEA)'s annual benchmark revisions show that the Federal Reserve's preferred inflation gauge was revised down more than expected, although the inflation level remains well above the Fed's 2% target. According to the analysts, the core PCE (Personal Consumption Expenditures Price Index) for August increased less than expected, with the year-on-year growth rate slowing to 3%, below the market consensus of 3.3% and the Fed's own estimate of 3.2%. At the same time, they noted that the economy is still expanding and private sector hiring activity remains robust. Analysts believe that, together with the downward revision of inflation data, these factors have somewhat eased the urgency for another rate hike in October.