September PCE data to be released tonight, Fed faces a moment of reckoning

On December 5, as this Friday’s key time point approaches, Wall Street’s attention is collectively focused on the upcoming release of the September Personal Consumption Expenditures (PCE) Price Index. As the Federal Reserve’s preferred inflation indicator, this report is not only the first official inflation reading since late September, but is also regarded as the “anchor” that could determine whether the US stock market breaks out of its recent volatility and establishes a future direction. Due to previous government shutdowns causing data release delays, there has been a large buildup of uncertainty in the market. Investors, analysts, and even Federal Reserve officials themselves are eagerly awaiting this overdue report to clarify the economic outlook.

Today at 23:00, the US September core PCE Price Index year-over-year will be released, with the previous value at 2.9%. The forecast for the overall PCE year-over-year is expected to be 2.8%, a slight rebound from August’s 2.7%. If this prediction comes true, it would mark the highest level since April 2024. The PCE month-over-month is expected to come in at 0.3%, unchanged from the previous value.

This PCE report is not only an economic checkup, but also the last key piece ahead of the Federal Reserve’s policy meeting next week. Currently, the Fed is in the midst of a fierce tug-of-war to fulfill its dual mandate from Congress—maintaining low inflation and high employment. If the PCE data confirms that inflation is moderately declining (or meets expectations), it will provide Fed officials with more cover to cut rates, further cementing market bets on a December rate cut. If the data unexpectedly “blows out” to the upside, it would not only weaken the case for rate cuts, but could even force the Fed to keep rates unchanged in the current 3.75%-4% range.