Producer Prices Match Expectations in September, but Fed Debate Intensifies

The Producer Price Index (PPI) for final demand rose 0.3% in September on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported Thursday. The print matched expectations, following a 0.1% decline in August and a 0.8% increase in July. Over the past 12 months, producer prices climbed 2.7%.

Core PPI—which excludes volatile food, energy, and trade services—edged up 0.1% in September after a 0.3% gain in August. On an annual basis, the core index rose 2.9%.

The Federal Reserve remains sharply divided over the path of monetary policy as inflation proves sticky and signs of labor-market softening intensify. Upcoming data could provide crucial clarity, helping policymakers determine whether to pause their rate-cut cycle or press ahead with additional easing at the December meeting.

That uncertainty is clearly reflected in market pricing. Expectations for a quarter-point cut have swung dramatically in recent weeks. Interest-rate futures were pricing in an 83% probability of a cut, up from roughly 42% a week earlier but down from nearly 92% in late October, according to the CME FedWatch tool.

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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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