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Business News/ Economy / Inflation pressures in the US eased in October, says Federal Reserve Bank of New York
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Inflation pressures in the US eased in October, says Federal Reserve Bank of New York

The Multivariate Core Trend inflation gauge, disclosed by the bank, revealed a reading of 2.6% for October, down from September's 2.88%. The higher MCT level, compared to the pre-pandemic average, was attributed to specific trends in housing and non-housing services.

FILE PHOTO: Federal Reserve Board Chairman Jerome Powell answers a question at a press conference (REUTERS/Kevin Lamarque/File Photo)Premium
FILE PHOTO: Federal Reserve Board Chairman Jerome Powell answers a question at a press conference (REUTERS/Kevin Lamarque/File Photo)

The Federal Reserve Bank of New York in a report released on December 4 said that underlying inflation pressures in the United States decreased in October compared to the preceding month.

The Multivariate Core Trend (MCT) inflation gauge, disclosed by the bank, revealed a reading of 2.6 percent for October, down from September's 2.88 percent. The bank attributed the higher MCT level, compared to its pre-pandemic average, to specific trends in housing and non-housing services.

Fed Meet Ahead

The NY Fed MCT index serves the purpose of assessing inflation persistence and the extent of changes in price pressures. This report coincides with the upcoming final policy meeting of the year for Fed officials. Expectations are widespread that they will maintain the overnight interest rate target within the range of 5.25-5.5 percent.

Indications suggest that the current rate target set by the central bank appears to be at its peak. Numerous Fed officials have indicated in recent weeks that with inflation pressures significantly lower than their pandemic peak, they have the flexibility to evaluate new data before deciding whether to adjust rates or maintain the status quo.

Federal Reserve Chairman Jerome Powell, speaking on December 1, noted that the economy is "better balanced" and stated satisfaction with the trajectory of economic development, expressing, "We are getting what we want."

New York Fed leader John Williams, in an address on November 30 remarked, "Based on what I know now, my assessment is that we are at, or near, the peak level of the target range of the federal funds rate."

Broad Trends

The NY Fed MCT reading has mirrored a broader decline in price pressures. The index reached its peak in June 2022 at 5.44 percent. October's figure also closely aligned with the six-month trend of the personal consumption expenditures price index, registering a 2.5 percent increase in October.

Powell, in his statement, acknowledged the recent lower inflation readings as positive, emphasising the need for this progress to continue to reach the targeted 2 percent.

Williams also anticipates the Fed closing in on its target by 2025. Officials are set to provide updates on their official inflation outlook at the Federal Open Market Committee (FOMC) meeting scheduled for December 12-13.

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Published: 05 Dec 2023, 07:34 AM IST
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