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US inflation rose less than expected to 3 per cent in September, paving the way for the Federal Reserve to continue cutting interest rates when it meets next week.
Friday’s annual consumer price index figure from the Bureau of Labor Statistics was up from 2.9 per cent in August but below expectations of 3.1 per cent among economists polled by Bloomberg.
The US dollar and Treasury yields fell slightly as the data release cemented expectations of rate cuts at the Fed’s two remaining meetings this year.
The dollar was down 0.2 per cent against a basket of currencies, while the two-year Treasury yield, which moves inversely to prices, fell 0.05 percentage points to 3.44 per cent.
US stock futures extended gains, with contracts linked to the S&P 500 up 0.6 per cent.
The data release — which was delayed by the ongoing shutdown of the US government — comes as the Fed is due to meet next on Tuesday and Wednesday, when it is expected to lower rates by a quarter point.
The Fed made its first reduction in borrowing costs this year at its last meeting in September, lowering rates by a quarter point to 4-4.25 per cent, and indicated more cuts would follow.
The board has been split this year over how fast and far to cut rates as it weighs the effects of a slowing labour market against the potential for a surge in inflation in the wake of Donald Trump’s tariff drive.
Fed chair Jay Powell has come under intense pressure from Trump to lower borrowing costs since the US president returned to the White House.
Annual core inflation rose to 3 per cent, less than the expected 3.1 per cent.
This is a developing story
