NEW YORK, Oct 28 (Reuters) - U.S. consumer spending increased more than expected in September while underlying inflation pressures continued to bubble, keeping the Federal Reserve on track to hike interest rates by 75 basis points for the fourth time this year.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.6% last month, the Commerce Department said on Friday. Data for August was revised higher to show spending increasing 0.6% instead of 0.4% as previously reported.
The personal consumption expenditures (PCE) price index rose 0.3% after a similar gain in August. Year to date it increased 6.2%, matching August’s rise. Excluding food and energy components, the PCE price index climbed 0.5% after increasing by the same margin in August. It advanced 5.1% on a year-on-year basis in September after increasing 4.9% in August. The Fed tracks the PCE price indexes for its 2% inflation target. Other inflation measures are running much higher. read more
JUAN PEREZ, DIRECTOR OF TRADING, MONEX USA, WASHINGTON:
“The data that came in this week gave Fed Chairman Jerome Powell a lot of credit because he has been adamant about ‘the economy being strong enough to withstand the hikes.’ He has made a point that officials foresaw an economy with resilience. This makes Fed policy likely to remain in the eyes of traders and investors, and thus adding to the ‘dollar-doom-loop’ we have experienced. A strong economy leads to faith in the economy but inflation must be battled with high rates, which only make the dollar stronger.”
