The Core PCE Report, the Personal Consumption Expenditures Price Index which is the Fed’s measure of inflation, will be released at 11 PM tonight (Friday).
According to Forex Factory, the reading for September is expected to rise by 0.2%, the same as before after a delay in the report due to the prolonged government shutdown.
The Core PCE is a key focus because it reflects the actual price pressures faced by the American people.
A 0.2% increase indicates that inflation is still moving slowly, giving consumers some breathing room as the cost of goods and services does not surge significantly. However, it is still not enough to bring inflation back to the 2% target that the Fed has aimed for over a long period.
In the market, expectations for monetary policy remain tilted towards easing.
LSEG data shows traders are pricing in nearly an 86% probability of a rate cut at the upcoming FOMC meeting, with projections of 2 to 3 more rate cuts in 2026.
A Reuters survey also shows the majority of economists expect the Fed to start cutting rates at the December meeting, adding pressure on the US dollar, which typically weakens in a low interest rate environment.
Ahead of next week’s FOMC meeting, market confidence in a rate cut has also increased.
According to CME FedWatch, the probability of a 25 basis point cut is now approaching 90%, reflecting sentiment that the Fed is increasingly likely to maintain a ‘dovish’ stance after several meetings this year.