Moderating Inflation Gives Fed Room to Maneuver Ahead of Rate Decision

The U.S. Consumer Price Index (CPI) for September rose by 0.3%, below the 0.4% consensus and down from August’s 0.4% increase, according to data from the Bureau of Labor Statistics. On a year-over-year basis, headline CPI advanced 3.0%, marginally below the 3.1% forecast and up slightly from August’s 2.9%.

The CPI measure that the Federal Reserve monitors more closely—core CPI, which excludes food and energy—rose 0.2% in September (vs. 0.3% anticipated and 0.3% in August). The annual rate softened to 3.0% from 3.1% the prior month.

With major economic releases delayed by the ongoing government shutdown, the Fed is navigating a uniquely opaque data landscape. The September inflation figure was nonetheless published on schedule to meet the Social Security Administration’s November 1 deadline for cost-of-living adjustment calculations.

This inflation report is the last significant data point ahead of the Federal Open Market Committee meeting next week, where a 25 basis-point rate cut, bringing the benchmark range to 3.75%–4.00%, is widely expected. Although potential tariff-driven inflation remains on the horizon, policymakers appear more focused on a softening jobs market and slower hiring—a dynamic this CPI print helps ease.

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About Joe Palmisano

Joe Palmisano is editorial director of Connect Money, where he oversees daily coverage of alternative assets, direct investments, financial advisory and the economy. He brings three decades of experience as a financial journalist, analyst and portfolio manager. Before joining Connect Money, Palmisano wrote for The Wall Street Journal, covering foreign exchange, global fixed-income and equity markets. He later served as a senior research analyst and portfolio manager, producing market analysis and managing foreign exchange and U.S. equity portfolios for FX Concepts. His work has also appeared in SFO Magazine and CMT Association publications. Palmisano earned a bachelor’s degree in finance from The American University and holds the Chartered Market Technician (CMT) designation and is a member of the CFA Institute.

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