2023-12-24 08:52:35
▲ U.S. economic growth rate trend The personal consumption expenditures (PCE) price index, which the U.S. Federal Reserve System (Fed) uses as a standard for monetary policy, fell compared to the previous month for the first time since the COVID-19 pandemic. The growth rate compared to the same month last year continued to slow to the mid-2% range, recording the lowest level in 2 years and 9 months.
The U.S. Department of Commerce announced on the 22nd (local time) that the PCE price index in November rose 2.6% compared to the same month last year. This rate of increase is the lowest in 2 years and 9 months since February 2021 (1.9%), suggesting that the Fed’s monetary policy target of ‘2% inflation rate’ is approaching.
Compared to the previous month, the index fell 0.1%. This is the first time in 3 years and 7 months that the PCE price index has fallen compared to the previous month since April 2020, at the beginning of the spread of the pandemic.
The PCE inflation rate rose to 7.1% in July of last year, the highest level in 21 years, but continues to slow in the aftermath of the Federal Reserve’s steep interest rate hike.
The core PCE price index, excluding energy and food, rose 3.2% compared to the same month last year, falling below the expert forecast (3.3%) compiled by the Wall Street Journal (WSJ).
Compared to the previous month, it rose 0.1%, meeting expert forecasts (0.1%).
The PCE Price Index is an indicator that measures the prices that U.S. residents pay when purchasing goods and services. The Federal Reserve gives more importance to the PCE price index than the Consumer Price Index (CPI) when deciding monetary policy. This is because the PCE price index, which reflects changes in consumer behavior, is believed to provide more accurate inflation information.
The November PCE price index increase rate announced today is below the Federal Reserve’s recent forecast.
Previously, in the economic outlook announced on the 13th, the Federal Reserve predicted the PCE price index growth rate at the end of this year to be 2.8% (median value) and the core PCE price index growth rate to be 3.2%.
As the price index that the Federal Reserve considers important continues to slow, expectations that the interest rate cut next year may be brought forward and the number of cuts may increase are expected to gain more weight.
According to FedWatch of the Chicago Mercantile Exchange (CME), the interest rate futures market is almost accepting that the Federal Reserve will lower interest rates at its monetary policy meeting in March or May next year.
Meanwhile, the PCE for November, which was also announced on this day, increased by 0.2% compared to the previous month, falling below expert expectations (0.3%).
Personal consumption expenditures continued to show good growth until September, but the increase appears to have slowed down in October. The growth rate of personal consumption expenditures in October was adjusted downward from 0.2% to 0.1%.
Personal income (after-tax basis) also increased by 0.4% compared to the previous month, meeting expert expectations (0.4%).
The previously announced U.S. CPI rose 3.1% compared to the same month last year. This result is in line with the expert forecast (3.1%) compiled by the Wall Street Journal (WSJ), and the rate of increase has slowed compared to the consumer price increase rate of 3.2% last October.
Compared to the previous month, it rose 0.1%.
The New York Times commented on the data released on this day, saying, “The inflation rate in November remained moderate, which is the latest sign that inflation has calmed down significantly from its peak.”
He added, “Accordingly, there is a high possibility that the Federal Reserve will freeze interest rates at the last meeting of the year held this week.”
However, Federal Reserve Chairman Jerome Powell said at an event held at Spelman University in Atlanta on the 1st, “It is premature to confidently conclude that we have achieved a sufficiently restrictive stance or to speculate when policy will be relaxed.” “If we decide to do so, we are ready to further strengthen the policy (raise interest rates),” he said.
Senior Reporter Song Han-soo
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