Annual U.S. inflation held steady in September, beating expectations

The US CPI was flat year-on-year, against expectations, while the core inflation rate tracked by the central bank and markets fell in line with market expectations.

The U.S. Labor Department said the consumer price index for September was steady at 3.7 percent on an annual basis, while the core consumer price index fell to 4.1 percent on an annual basis, in line with expectations and the lowest level in more than two years.

Economists polled by Reuters had expected annual inflation to ease to 3.6 percent last September.

On a monthly basis, the consumer price index fell 0.4 percent last month, down from 0.6 percent in August.

Economists polled by Reuters had expected inflation to ease to 0.3 percent last September.

A decline in the core inflation rate in the United States may increase speculation that the Federal Reserve will continue to stabilize interest rates at its upcoming meetings.

At its last meeting, the US Federal Reserve decided to keep interest rates unchanged at a 22-year low after raising interest rates 11 times since March 2022, hitting a target range of 5.25 percent to 5.5 percent.

Minutes from the Federal Reserve’s Sept. 19-20 meeting show increasing uncertainty over the path of the U.S. economy, with volatile data and tight financial markets posing risks to growth.

The Fed’s minutes from last September’s meeting showed all participants agreed that monetary policy should remain tight for a while until the Federal Reserve’s interest rate-setting committee is confident that inflation is moving steadily downward toward its 2 percent target.

Boston Federal Reserve Bank President Susan Collins said on Wednesday that the U.S. central bank has not raised interest rates with the aim of returning inflation to its target, despite increasing chances of the economy escaping a recession.

Comments from other central bank policymakers, including Rafael Bostic of Atlanta, are also expected on Thursday.

Since the September meeting, markets have dismissed the prospect of another rate hike. There is only a 9 percent chance of raising the interest rate at the next meeting, which is scheduled for October 31 to November 1. There is a 28 percent chance of a December meeting, according to CME Group’s FedWatch tool.