The Core PCE report, the Personal Consumer Price Index that is the Fed's inflation measure, will be released at 11pm tonight (Friday).
According to Forex Factory, the reading for September is expected to rise 0.2%, the same as before after the report was delayed due to the prolonged government shutdown.
Core PCE is of major concern because it reflects the real price pressures being borne by Americans.
The 0.2% increase shows that inflation is still moving slowly, thus giving some room for consumers when the cost of goods and services has not jumped significantly. However, it is still not enough to bring inflation back to the 2% target that the Fed has been aiming for for a long time.
In the market, expectations for monetary policy remain tilted towards easing.
LSEG data showed traders were pricing in a near 86% probability of a rate cut at the next FOMC meeting, with 2 to 3 more rate cuts expected in 2026.
A Reuters poll also showed a majority of economists expected the Fed to begin cutting rates at its December meeting, adding to pressure on the US dollar, which is typically weak in a low-interest-rate environment.
Ahead of next week’s FOMC meeting, market confidence in a cut has also risen.
According to CME FedWatch, the probability of a 25 basis point cut is now near 90%, reflecting sentiment that the Fed is moving closer to maintaining its dovish stance over the past several meetings this year.
