The Fed's preferred inflation gauge indicated a 0.2% price increase from September, leading to an annual increase of 2.3%. This represents a slight uptick from September's figure of 2.1%. Core PCE, excluding food and energy, rose 0.3% month over month and 2.8% annually, marking the highest core reading since April. The report has led to increased speculation about a possible 25-basis point interest rate cut in December, with current odds at 66.5%. Despite this, some economists anticipate that the Fed will maintain higher rates longer due to persistent inflationary pressures. The labor market remains robust, with initial jobless claims reported at 213,000, the lowest since April. Given recent data, officials may reconsider their plans to lower interest rates by the end of 2024. The potential impacts of a second Trump term are also a concern for committee members, which could influence their decision-making going into 2025.

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