- Inflation worries are in the headlines, and the data are challenging the Fed’s dual mandate to manage inflation and unemployment.
- Inflation had consistently undershot the Fed’s 2% target, prompting the Fed to change its inflation framework.
- Fed’s aim is to achieve an average of 2% inflation over the medium term, which is not specifically defined.
- Personal Consumption Expenditures (PCE) Index is the Fed’s target, different from and typically lower than CPI-U, which had a year-over-year gain of 8.3% as of Sept. 30. Core PCE dropped from 5.4% in February to 4.7% in July, then inched back up to 5.1% in September.