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The Federal Reserve is about to learn how its preferred measure of inflation fared in September: On Thursday, the Commerce Department releases the latest Personal Consumption Expenditures price index, the last reading the central bank will get before it meets to set interest rates next week.
From the same month one year ago, the PCE price index for August increased 2.2%. Prices for goods decreased 0.9% and prices for services increased 3.7%. This could be the week when inflation hits the Fed’s sweet spot of 2%.
“You know, we’re getting back to where we should be,” said Alan Detmeister, an economist for UBS who used to work for the Fed.
He expects the PCE price index for September to come in around maybe 2.1% or 2%, adding that’s largely due to recent declines in energy prices — specifically, gasoline.
But don’t get used to that 2%, he said. “We’re expecting it to bounce back up over the next handful of months.”
That’s because Detmeister doesn’t expect energy prices to keep falling the way they have been, though he believes the overall trajectory of inflation is on track.
That’s the good news, said Belin …
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