Fed's Inflation Gauge Falls Short, Rate Hike Odds Plummet

The Federal Reserve's preferred inflation gauge, the personal consumption expenditures price index, saw a lower-than-expected increase in September. The Commerce Department reported that prices rose 0.3% seasonally adjusted for the month, with a 12-month gain of 3.4%, below the 3.7% expected by economists.

The core index, which excludes food and energy costs, showed a 0.2% increase, below the 0.3% forecasted by analysts, with an annual figure of 3%, lower than the 3.3% anticipated by experts.

Economists are now less likely to predict a rate hike from the Fed, as indicated by the CME Group's FedWatch tool, which shows that chances of keeping interest rates at current levels have increased to 62.9%, up from 49.1% on Tuesday.