A delayed reading on the Federal Reserve’s preferred inflation gauge released Thursday keeps the central bank on course to hold interest rates steady next week.
The Bureau of Economic Analysis released a combined measure of the Personal Consumption Expenditures Index for October and November due to the government shutdown which showed inflation rose 2.8% year-over-year, excluding volatile food and energy prices, and 0.2% month over month. Those numbers were in line with economists’ expectations.
For portions of October lacking detailed information from the Consumer Price Index, which is used to calculate PCE, the BEA used an average of September and November figures.
“This is an example of the government shutdown and the disruption in data make it hard to say it’s clear, we’re moving in one direction or another,” former Kansas City Federal Reserve president Esther George told Yahoo Finance. “Not much has budged on inflation, and consumers are still spending.”
Read more: How to protect your savings against inflation
Joseph Brusuelas, chief economist for RSM, wrote in a note to clients that since the Consumer Price Index and the Producer Price Index — both of which are used to calculate PCE — have been released for December, Thursday’s PCE data is stale. Brusuelas said he expects core PCE inflation to rise to 3% for the month of December, given the CPI and PPI numbers. That data is set for release Feb. 20.
“Based on the November PCE data as well as the December CPI and PPI data, we think that this reinforces our view of no near-term rate cuts in the first quarter of 2026,” Brusuelas wrote.
The inflation reading comes as consumer spending remained strong last fall and economic growth in the third quarter was revised higher by a tenth of a percent to 4.4% on stronger exports and business spending than initially thought.
“The strength of the consumption data adds further weight to the idea that the economy might not need additional policy support, with real consumption rising by 0.3% in both months,” noted Capital Economics economist Thomas Ryan.
At its policy meeting next week, the Fed is expected to hold rates steady in the range of 3.5% to 3.75% after cutting rates three times last fall.
Click here for the latest economic news and indicators to help inform your investing decisions
Read the latest financial and business news from Yahoo Finance