Inflation slows again, the Fed’s preferred price tracker showed

The numbers: The cost of goods and services were flat in October, suggesting a further slowdown in inflation that could persuade the Federal Reserve to stop raising interest rates.

Inflation as measured by the so-called PCE price index was held down in part by a decline in oil prices. Still, the gauge more broadly indicated an easing in price pressures.

The increase in inflation over the past year decelerated to 3% from 3.4% in the prior month.

The more closely followed core PCE index, meanwhile, increased a touch faster in October at 0.2%. That matched the forecast of economists polled by The Wall Street Journal.

The core rate excludes food and energy and is viewed the Federal Reserve as a better predictor of future inflation.

The increase in the core rate in the last 12 months slowed to 3.5% from 3.7% in September and touched the lowest level since the spring of 2021.

Big picture: Inflation is still running well above the Fed’s 2% goal, but senior Fed officials and an increasing number of Wall Street economists believe interest rates are high enough to hit the target in the next year or two.

Investors are also betting that the Fed is done raising interest rates. The central bank has jacked up its benchmark short-term rate to a top end of 5.5% from near zero just 18 months ago.

Before the markets opened, the Dow Jones Industrial Average DJIA, +0.04% and S&% were set to rise in Thursday trades.

The yield on the 10-year Treasury note % was little changed at 4.29%.