It’s becoming more likely that the US Federal Reserve has managed an elusive soft landing, with overall inflation back near the Fed’s long-term goal of 2% (from a peak of over 9%) without triggering a recession. 

This appears against a backdrop of a steadily growing US economy, with: 

• inflation-adjusted gross domestic product (GDP) increasing at an annualized 2.8%, and
• consumer spending, which accounts for 70% of economic output, increasing by 3.7%.  

Barring unexpected shocks from the US election or other geopolitical events, we should expect to see another quarter-percentage point reduction in the benchmark interest rate at the Federal Open Market Committee meeting this Thursday. A moderate reduction in interest rates will further help to fuel steady growth in the US economy.

Overall inflation in the US is now 2.1%, the lowest since early 2021 and just above the central bank’s 2% goal. The Federal Reserve’s preferred measure, however, posted its biggest monthly gain since April, bolstering the case for a slower pace of interest-rate cuts following last month’s big reduction. The so-called core personal consumption expenditures price index, which strips out volatile food and energy items, increased 0.3% in September. On the jobs front, applications for unemployment benefits fell last week to their lowest since May. Initial claims decreased by 12,000 to 216,000 in the week ended Oct. 26. The median forecast in a Bloomberg survey of economists called for 230,000 applications. Continuing claims, a proxy for the number of people receiving benefits, fell to 1.86 million in the previous week, according to Labor Department data released Thursday.

https://www.bloomberg.com/news/newsletters/2024-10-31/federal-reserve-has-another-reason-to-take-it-slow-with-new-inflation-data?cmpid=BBD103124_EVEUS&utm_term=241031