The U.S. Federal Reserve has long pursued the 2% inflation target. New September inflation data suggests it might be close to achieving it.

Inflation Moving Towards Fed's Target

Latest data indicates inflation is nearing the Fed's 2% goal. Specifically, the Commerce Department's Personal Consumption Expenditures (PCE) price index is projected to show a 12-month inflation rate of 2.04%, which could be rounded down to 2%.

Impact of High Rent Costs

While overall inflation seems under control, core inflation, excluding food and energy, remains high, with rent being a major contributor. The Fed hopes for a cooling in housing inflation to help achieve broader disinflation goals.

Fed Rates: What's Next?

The Fed recently cut rates by half a percentage point, an unusual move in a stable economy. Further rate cuts are planned but might be delayed. Economists caution that aggressive cuts could reignite inflation.

The Fed is nearing its long-term inflation goal but remains cautious about potential rate cuts to prevent reigniting inflation.