NY Fed Reports That Underlying US Inflationary Pressures Abated In October

As compared to September's figure of 2.88%, the bank's Multivariate Core Trend (MCT) inflation reading for October was 2.6%. The bank stated that the increased MCT in comparison to its average before the pandemic "is largely attributable to sector-specific trends in housing and services excluding housing."

The purpose of the NY Fed MCT index is to assess the persistence of inflation and the extent to which price pressures are evolving. As Fed officials approach their final policy meeting of the year, where they are widely anticipated to maintain their overnight interest rate objective between 5.25% and 5.5%, the report is released.

It seems that the central bank has reached its maximum rate target at the present time. Inflationary pressures are well below their pandemic apex, according to a variety of Fed officials who have signalled in recent weeks that they have the flexibility to assess new data in order to determine whether they should maintain current interest rates or raise them once more.

Chairman of the Federal Reserve Jerome Powell stated on Friday that the economy is "better balanced" and that "we are getting what we want" in terms of its trajectory.

John Williams, the head of the Federal Reserve Bank of New York, stated on Thursday, "Based on the information at hand, I am convinced that we are at or near the upper limit of the target range for the federal funds rate."

The NY Fed MCT reading has been influenced by an overall decrease in price pressures. In June of 2022, the index reached its highest point at 5.44%. The reading for October was consistent with the six-month trend of the personal consumption expenditures price index, which increased by 2.5% in October.

"While the lower inflation readings of the past few months are welcome, that progress must continue if we are to reach our 2% objective," Powell indicated on Friday.

Williams stated in an appearance on Thursday that he anticipates the Fed to approach its objective in 2025. The official outlook on inflation will be updated during the FOMC meeting that is scheduled to take place from December 12-13.