watch
now
A
gauge
the
Federal
Reserve
uses
for
inflation
rose
slightly
in
November
and
edged
closer
to
the
central
bank’s
goal.
The
core
personal
consumption
expenditures
price
index,
which
excludes
volatile
food
and
energy
prices,
increased
0.1%
for
the
month,
and
was
up
3.2%
from
a
year
ago,
the
Commerce
Department
reported
Friday.
Economists
surveyed
by
Dow
Jones
had
been
expecting
respective
rises
of
0.1%
and
3.3%.
On
a
six-month
basis,
core
PCE
increased
1.9%,
indicating
that
if
current
trends
continue
the
Fed
essentially
has
reached
its
goal.
“Adding
in
the
further
sharp
slowdown
in
rent
inflation
still
in
the
pipeline,
it’s
hard
to
see
any
credible
reason
why
the
annual
inflation
rate
won’t
also
return
to
the
2%
target
over
the
coming
months,”
wrote
Andrew
Hunter,
deputy
chief
U.S.
economist
at
Capital
Economics.
Markets
reacted
little
to
the
report,
with
Wall
Street
set
for
a
mixed
open
Friday
in
its
last
session
before
the
Christmas
holiday.
Elsewhere
in
the
report,
consumer
expenditures
in
November
climbed
0.3%
while
income
rose
0.4%,
numbers
that
were
in
line
with
expectations
and
indicative
that
spending
was
continuing
apace
despite
ongoing
inflation
pressures.
Including
food
and
energy
costs,
so-called
headline
PCE
actually
fell
0.1%
on
the
month
and
was
up
just
2.6%
from
a
year
ago,
after
peaking
above
7%
in
mid-2022.
That
was
the
first
monthly
decline
since
April
2020,
according
to
Fed
data.
The
12-month
numbers
are
significant
in
that
both
show
inflation
making
continued
progress
toward
the
Fed’s
2%
target.
“The
Federal
Open
Market
Committee
is
not
yet
ready
to
declare
victory
on
inflation,
but
the
outlook
is
much
better
than
it
was
just
a
few
months
ago,”
wrote
Gus
Faucher,
chief
economist
at
PNC
Financial
Services.
“The
slowing
in
core
inflation
opens
the
door
for
fed
funds
rate
cuts
in
2024;
the
timing
will
depend
on
core
PCE
numbers
over
the
next
few
months.”
The
Fed
prefers
PCE
as
an
inflation
measure
over
the
more
widely
followed
CPI
as
the
former
focuses
more
on
what
consumers
actually
spend
rather
than
the
latter’s
measure
of
what
goods
and
services
cost.
Though
policymakers
watch
both
measures,
they
are
more
concerned
with
core
prices
as
a
longer-run
inflation
gauge.
November’s
report
reflected
a
shift
in
consumer
appetite,
as
prices
for
services
increased
0.2%
while
goods
slumped
0.7%.
A
2.7%
slide
in
energy
prices
and
a
0.1%
decrease
in
food
helped
hold
back
inflation
for
the
month.
Much
of
the
market’s
focus
lately
has
been
on
the
Fed’s
inflation
view
and
what
that
will
mean
for
interest
rates.
For
each
of
its
last
three
meetings,
the
Federal
Open
Market
Committee
has
held
the
line,
keeping
its
benchmark
overnight
borrowing
rate
targeted
between
5.25%-5.5%.
At
its
meeting
last
week,
the
committee
indicated
it
is
done
raising
rates
and
expects
to
implement
cuts
totaling
0.75
percentage
point
in
2024.
Markets
expect
the
first
rate
reduction
to
happen
in
March.
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