US PCE inflation gauge accelerates as consumer spending picks up

On October 31, the Federal Reserve's favored PCE inflation gauge posted its biggest monthly gain since April, supporting the Fed's slowing pace of rate cuts after last month's sharp cut. The U.S. core PCE price index rose 0.3% on a monthly basis in September, and the PCE price index came in at an annualized rate of 2.1% in September, the lowest level since the beginning of 2021 and slightly above the Fed's 2% target. Inflation-adjusted consumer spending rose 0.4%, supported by a 0.1% increase in real income. The savings rate fell to 4.6%. Tonight's data release capped a month of unexpected upside in major economic reports, which could signal a cautious approach by the Fed in cutting interest rates in the coming months. Markets widely expect the Fed to make its second rate cut in November, after it cut rates for the first time in September.