30 September 2016 at 20:42 GMT
Two important inflation updates were received in the last 24 hours. First, the Bank of Japan’s inflation benchmark came in at –0.50% in the year to August, the same as the previous month. The rate of increase in core inflation (i.e excluding energy) continues to decline, slipping to 0.4%. More concerning is that the flash estimate for September, based on Tokyo prices, showed core inflation in negative territory.
In the US, the Federal Reserve’s inflation benchmark, the index of Personal Consumption Expenditures (PCE), rose by 1% over the year to August 31, reversing recent declines, and perhaps putting a smile on Fed Chair Janet Yellen’s face. The core rate has increased to 1.7% (see chart below). Moving in the right direction – but at a snails pace
The probability of a rate rise at the December FOMC meeting has increased to 60%