Key inflation gauge shows price increases stayed flat from prior month

Published On Nov 27, 2024, 10:02 AM

The latest data from the Federal Reserve's core Personal Consumption Expenditures (PCE) index indicates that inflation has not shown significant change, with monthly price increases remaining flat from September to October. Year-over-year, core prices rose by 2.8%, slightly above expectations. Overall, PCE saw a 2.3% rise compared to 2.1% in September. This data casts doubt on the Fed's progress toward their 2% inflation target. Despite this, markets still anticipate a potential interest rate cut in December 2024, with current predictions indicating a 67% chance of such a move.

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Given the inflation data showing stagnation, there may be increased uncertainty in the market regarding future interest rate cuts, which could weigh on growth-oriented stocks. However, if the Fed does proceed with a rate cut, this could provide a boost to equity markets. Investors might consider focusing on defensive sectors or those positively correlated with lower interest rates, such as utilities and consumer staples.

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