GDP looks solid but PCE inflation is still surging - does that kill any chance of a December Fed rate cut?
The latest data is being described as the last snapshot of the US economy before the midterms: growth came in stronger than expected, but the PCE inflation reading shows prices still rising, and analysts say a Fed pause on rate hikes is unlikely to last long. I was hoping a December cut might bring mortgage and loan rates down a bit before I refinance early next year. With growth solid and inflation hot at the same time, is a December cut basically off the table, or is one hot PCE print not enough to change the Fed path?
1 answer
- Hot PCE plus solid growth means no December cut
The Fed cuts when growth is weak or inflation is clearly falling, and neither is true here. Growth came in stronger than expected, so there is no urgency to stimulate, and a surging PCE print gives hawks a reason to hold. One print alone rarely decides a meeting, but the combination points to hold in December. If you are refinancing early next year, plan around current rates rather than betting on a cut that may not come.