Analyst: U.S. Inflation Indicator Downgrade Exceeds Expectations

On September 30, analysts at the Bank of Montreal noted in a research report that the annual benchmark revisions from the Bureau of Economic Analysis indicated that the downgrade of the Federal Reserve's preferred inflation indicator exceeded expectations, even though the inflation level remains above the Fed's 2% target. The core PCE (Personal Consumption Expenditures Price Index) in August rose less than expected, with a year-on-year growth rate slowing to 3%, below the market consensus expectation of 3.3% and the Fed's own estimate of 3.2%. Analysts stated that the economy is still expanding, and private sector hiring remains robust. These factors, along with the downgrade in inflation data, have alleviated the urgency for another rate hike in October.