New data on core inflation in the US confirmed persistent price pressures but did not change the Federal Reserve’s plans. According to the Commerce Department report, the core personal consumption expenditures (PCE) index rose by 0.2% in August month-over-month and remained at 2.9% year-over-year. This figure fully matched analysts’ forecasts and market expectations.
Growth in spending and income amid stable inflation
The overall PCE index added 0.3% for the month, raising annual inflation to 2.7% from 2.6% in July. The core figure, excluding food and energy, was unchanged from previous months, highlighting the trend stuck at 2.9%.
At the same time, American consumers continue to show strength: personal incomes rose by 0.4%, and spending — by 0.6%, exceeding economists’ expectations. This signals that price growth has not yet put noticeable pressure on consumer activity.
Economists note that the high resilience of consumers supports economic growth, but at the same time prevents inflation from falling to the target 2%.
The Fed’s policy and plans for the end of the year
The Federal Reserve already cut the rate by 0.25 p.p. in September, setting the range at 4%–4.25%. This was the first monetary policy easing in 2026. The Fed leadership maintains its intention to make two more rate cuts by the end of the year.
Markets are confident about the October move, while the December decision remains in question. Many analysts believe the Fed will prefer to act gradually to avoid accelerating inflation, while still supporting economic growth.
Fed Chair Jerome Powell specifically noted that the new tariffs from the Donald Trump administration did not trigger a spike in prices. Many companies managed to stock up on goods in advance or absorbed some of the costs themselves.
“This is more of a one-off shock than a long-term factor,” he said.
Disputes within the regulator
Not all Fed representatives share the optimism. Some officials believe that room for maneuver is shrinking: further cuts could increase inflationary pressure if price growth remains above target.
However, supporters of policy easing point to a slowdown in the labor market and a decline in job openings as a signal for the need for additional stimulus.
The economy at a crossroads
The combination of stable inflation, rising incomes, and active consumption creates a mixed picture. On the one hand, Americans keep spending, supporting GDP, which is forecast to grow by more than 3% in Q3. On the other hand, resilient demand is not allowing inflation to fall faster.
The Fed’s decisions in the coming months will be crucial for the dollar’s course, stock markets, and global liquidity. For now, the regulator is balancing between the need to support growth and the desire to return inflation to its target level.
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