September PCE Inflation Keeps the Federal Reserve on Guard
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The essentials at a glance
September data showed faster U.S. economic growth alongside inflation that remained above the Federal Reserve’s target.
September data showed faster U.S. economic growth alongside inflation that remained above the Federal Reserve’s target.
đź“ť Key Takeaways
- PCE Inflation Stays Above Target: PCE inflation accelerated in September, with the personal consumption expenditures price index rising 0.5% for the month.
- PCE Inflation, GDP Growth: The economy expanded at a 3.4% annualized pace in the third quarter, exceeding the 3.1% estimate.
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- The annual PCE inflation rate was 3.6% in September.
- U.S. GDP grew at a 3.4% annualized pace in the third quarter.
PCE Inflation Stays Above Target
PCE inflation accelerated in September, with the personal consumption expenditures price index rising 0.5% for the month. The annual rate reached 3.6%, remaining above the Federal Reserve’s 2% target.
For mortgage borrowers, persistent inflation can matter because it may affect how quickly the Federal Reserve is willing to change interest rates. That connection is indirect: mortgage pricing also depends on financial markets and lender conditions.
PCE Inflation, GDP Growth
The economy expanded at a 3.4% annualized pace in the third quarter, exceeding the 3.1% estimate. The reading points to stronger recent growth than forecasters had expected.
A combination of firm growth and elevated PCE inflation can leave the path for future rate decisions dependent on incoming data rather than a preset timetable. That can keep borrowing costs sensitive to new economic reports, including for homebuyers comparing loan offers.
