Citigroup: The Fed's preferred inflation measure is expected to support a 25 basis point rate cut in November

Citi economist Andrew Hollenhorst believes that the US PPI index, combined with yesterday's unexpectedly high CPI, supports the Fed's decision to cut interest rates by 25 basis points next month. The Fed's preferred inflation indicator PCE combines price data from CPI and PPI, so the combination of these two data allows forecasters to make precise predictions for PCE in September. Citi believes that the core PCE, which excludes volatile food and energy prices, will increase by 0.21% month-on-month in September, while the 12-month PCE will fall from 2.7% in August to 2.6%. Hollenhorst pointed out that this should allow the Fed to continue to cut interest rates. (Jinshi)