Underlying consumer price growth decelerated in the United States last month, clearing the way for a second consecutive rate cut from the Federal Reserve at next week’s meeting, and putting downward pressure on the dollar. According to delayed data published by the Bureau of Labor Statistics this morning, the core consumer price index—with highly-volatile food and energy prices excluded—rose 0.2 percent in September, accelerating slightly from August’s 0.3-percent increase, and rising 3.0 percent on a year-over-year basis. This undershot consensus estimates among economists polled by the major data providers ahead of the release, and was the slowest pace recorded in the last three months. On a headline all-items basis, prices climbed 0.3 percent month-over-month, slowing down from the 0.4-percent pace set a month earlier, and were up 3.0 percent year-over-year.

With the government currently in shutdown mode, inflation prints in the coming months will contain a higher noise-to-signal ratio than is typical, meaning that market participants and policymakers may be forced to rely upon private-sector data series and anecdotal reports to feel their way forward.

Treasury yields are coming down on the policy-sensitive front end of the curve, equity futures are surging ahead of the open, and the dollar is slipping against its major rivals as traders move to price in more monetary easing from the Fed beyond next week’s meeting. Futures markets are pricing in a total of two rate cuts by year end, followed by another two and a half over the course of 2026—but the central bank’s renewed focus on employment rather than inflation implies that this could change if the economy exhibits more meaningful signs of slowing (or reacceleration) in the months ahead.