Grapevine

The Federal Reserve may have pretty much just hit its 2% inflation target

Federal Reserve Chairman Jerome Powell arrives to a news conference following the September meeting of the Federal Open Market Committee at the William McChesney Martin Jr. Federal Reserve Board Building on September 18, 2024 in Washington, DC.

This week's inflation data provided more evidence that the Federal Reserve is nearing its objective, fresh on the heels of the central bank's dramatic interest rate cut just a few weeks ago.

Consumer and producer price indexes for September both came in around expectations, showing that inflation is drifting down to the central bank's 2% target.

In fact, economists at Goldman Sachs think the Fed may already be there.

The Wall Street investment bank Friday projected that the Commerce Department's personal consumption expenditures price index for September will show a 12-month inflation rate of 2.04% when it is released later this month.

If Goldman is correct, that number would get rounded down to 2% and be right in line with the Fed's long-held objective, a little over two years after inflation spiked to a 40-year high and unleashed an aggressive round of interest rate hikes. The Fed prefers the PCE as its inflation gauge though it uses a variety of inputs to make decisions.