Catenaa, Friday, September 26, 2025- The US Personal Consumption Expenditures (PCE) index core measure inflation stood at 2.9% for August, in line with expectations, holding the same level as in July.
Fed officials last week cut rates for the first time in 2025 and predicted two more cuts for the year, which would mean reductions at meetings in late October and early December.
They see inflation rising to 3.1% in 2025 before coming back down to 2.6% next year.
Those figures would leave inflation still above the Fed’s goal of 2%, but many policymakers are now more worried about weakness in the job market than prices. The Fed has a dual mandate to maintain stable prices and maximize employment.
Consumer prices rose 0.3% in August from July, lifting personal-consumption expenditures, or PCE, inflation to 2.7% over the past year, up from 2.6% a month earlier, the Commerce Department said Friday.
The real determining factor for what the Fed does at its next policy meeting is a new jobs report due out next Friday. But that could get delayed if there is a government shutdown next week, creating new uncertainties for policymakers.
The path of inflation remains uncertain as President Trump’s tariffs work their way through the US economy.
Fed Chair Jerome Powell said this week that tariffs will likely result in a one-time price increase, but that may not be all at once and may be spread across several quarters, thus showing up as somewhat higher inflation during that period.
He stressed that the Fed will make sure that this one-time increase in prices does not become an ongoing inflation problem, which is important for inflation expectations.
