December Interest-Rate Cut in Play Despite Persistent Inflation
Few surprises in the October personal income and outlays report should keep the Federal Reserve on track to cut interest rates on Dec. 18—pending a pair of key economic data releases between now and then.
The Fed’s preferred inflation gauge came in as expected in October, just above the central bank’s 2% annual target, while both consumer income and spending continued to grow at a more-than-healthy pace.
Fed officials believe that monetary policy is currently restrictive, and there’s room to lower rates to keep the economic expansion going while still weighing on inflation. However, little recent progress on slowing price growth could mean a pause in rate cuts could be coming sooner rather than later.