US December rate cut changes? Core PCE in October reached a six-month high, with a focus on Black Friday sales.

The U.S. Department of Commerce announced that the core PCE in October increased by 2.8% year-on-year, reaching a six-month high, indicating that the cooling of inflation has stagnated, which may affect the pace of the Fed's rate cut in December. However, this contrasts with the performance of the labor market data, as continued jobless claims have reached a three-year high, adding to the possibility of another rate cut. (Background: The Fed's November FOMC meeting: the pace of rate cuts may slow down or pause, neutral Intrerest Rate outlook) (Additional context: Federal Reserve officials support continued cuts in Intrerest Rate, and even pro-Fed officials have stated that a rate cut in December is reasonable.) The U.S. Department of Commerce released the October Personal Consumption Expenditures (PCE) index last night (27th), showing a year-on-year increase of 2.3%, in line with market expectations, slightly higher than the previous value of 2.1%; a month-on-month increase of 0.2%, the same as the previous value, also in line with market expectations. However, excluding energy and food, the core PCE price index increased by 2.8% year-on-year, the largest increase since April this year, slightly higher than the previous value of 2.7%. Although this still meets market expectations, the data shows that the cooling of inflation in the United States has stagnated, providing a basis for the Fed not to rush to cut rates in December. The rise in service prices drove the rise in the core PCE index. The data shows that the monthly growth rate of core service prices reached 0.4% in October, the largest increase since March this year. This rise reflects the surge in portfolio management fees, echoing the recent rise in the stock market. Other data released on the same day also shows economic vitality: personal spending in October rose by 0.4% month-on-month; the initial annualized GDP for the third quarter of the United States reached 2.8%, indicating that both household and business spending still have resilience. These data support the recent comments of many Fed officials, that as long as the labor market is healthy and the economy is developing steadily, there will be no rush to cut rates. The minutes of the November FOMC meeting released by the Fed on the evening of the 26th also emphasized a cautious approach to rate cuts, gradually cutting rates based on data performance, and if inflation data does not meet expectations, the pace of rate cuts may slow down or pause. When discussing the outlook for monetary policy, participants expected that if data continues to fall as expected, inflation will continue to decline to 2%, and the economy will still be close to maximum employment, then a gradual shift to a more neutral policy may be appropriate. However, a piece of labor market data provides a reason for a rate cut. In the seven days ending November 23, continued jobless claims increased by 9,000 people, reaching 1.907 million, a near three-year high. This shows that many unemployed individuals may face long-term unemployment, reinforcing the view that it is more difficult for the unemployed to find jobs compared to the high inflation period in previous years, adding to the possibility of another rate cut by the Fed in December. In addition, new applications for unemployment benefits decreased by 2,000 people to 213,000, lower than the market expectation of 216,000, and lower than the previous week's 215,000 (revised from 213,000), indicating that although companies are not aggressively hiring, they also have a low willingness to lay off employees. Companies are willing to retain employees, which helps support stable economic growth in the United States and avoid a recession. Comprehensive analysis of recent economic data shows that although core inflation pressures still exist, the labor market has shown resilience, and consumer spending continues to support economic growth, indicating that the U.S. economy may be approaching a "soft landing." Economists are following the Black Friday sales to assess consumer momentum. Retail giants such as Target, Best Buy, and Walmart have extended holiday promotions to attract discount-seeking consumers. However, some analysts point out that many consumers rely on credit cards and loans, and there are signs of a rise in default rates among young and low-income groups, reflecting increased financial pressure. FedWatch: The probability of a rate cut in December has risen to 68% After the release of Wednesday's economic data, the latest data from the CME FedWatch tool shows that the market has slightly increased its bet on a 1-point rate cut in December, from about 66.6% yesterday to the current 68.2%, with only a 31.8% probability of pausing rate cuts. At the same time, the market and institutions also predict that the Fed will slow down the pace of rate cuts next year. Nomura Securities' latest forecast indicates that the Fed will pause rate cuts at the December Intrerest Rate meeting and will only cut rates by 1 point in March and June 2025; Lin Qichao, chief economist at Cathay United Bank, said last week that the Fed will still cut rates by 1 point in December this year, and then by 1 point each in March and June next year; Matthew Luzzetti, chief economist at Deutsche Bank, predicts that the Fed will make a final rate cut in December this year, by 1 point, and may then pause rate cuts for the entire year. Related reports: Nomura Securities predicts that the Fed will pause rate cuts in December and only cut rates by two points next year... Uncertainty high with Trump in office Weekly Report: BTC falls after hitting a new high, Powell not rushing to cut rates Market sentiment shifts, meme coins hot... Powell hawkish "not rushing to cut rates," BTC price drops $86,600, U.S. stocks in a slump, October PPI shows inflation still sticky "Will there be a change in the Fed's December rate cut? October core PCE reaches a six-month high, key focus on Black Friday sales" This article was first published on BlockTempo, the most influential blockchain news media in the BlockTempo.