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Inflation Cools, But Strong Jobs Data Could Trigger Fed Rate Hike
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CNBC TV18•01-10-2026, 06:26
Inflation Cools, But Strong Jobs Data Could Trigger Fed Rate Hike
  • •The Personal Consumption Expenditures (PCE) price index rose 3.4% year-over-year in August, below the 3.7% forecast, while core PCE (excluding food and energy) increased by 3%, also less than anticipated.
  • •Cooler-than-expected inflation data boosted equities and lowered the odds of an October rate hike to 35% from 50%, according to the CME Group's FedWatch tool.
  • •However, market gains were tempered by stronger-than-expected employment data, with private payrolls rising by 90,000 in September, exceeding the 68,000 consensus.
  • •Economists and strategists note that while inflation is cooling, a robust U.S. jobs report on Friday could lead investors to reprice the likelihood of another Federal Reserve rate increase.
  • •Some experts believe the data presents a "goldilocks combination" supporting risk assets and reducing immediate rate hike probability, while others caution that progress on taming inflation has stalled and September's figures may be higher.
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Key Questions Answered

The personal consumption expenditures price index rose 3.4% year over year in August, which was well below the Dow Jones forecast of 3.7% and provided a boost to equities.

The cooler-than-expected inflation numbers lowered the odds of an October interest rate hike to 35% from around 50% according to the CME Group's FedWatch tool.

Private payrolls rose by 90,000 in September, coming in higher than the Dow Jones consensus estimate of 68,000.

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