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Has the Fed finally hit its 2% inflation target?

Author: Content Editor
The Federal Reserve is getting closer to its 2% inflation target, with new data showing that inflation is dropping towards the goal. Goldman Sachs projects that the PCE price index for September will show a 12-month inflation rate of 2.04%, rounding down to 2%. However, core inflation remains a problem, estimated to reach 2.6% by Goldman Sachs. Fed Chair Jerome Powell expects rent inflation to cool down and for housing inflation to fall. The Cleveland Fed's "inflation nowcasting" tool shows a headline PCE rate of 2.06% for September. The Fed recently slashed rates by half a percentage point. Future rate cuts are expected, but the Fed must be careful to avoid reigniting inflation. Economists do not anticipate widespread price cuts, as businesses are unlikely to lower prices unless demand drops significantly. Prices for physical goods have dropped due to normal supply and demand conditions after the pandemic. Overall, price declines during a recession are uncommon.

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