Inflation pressures are easing, and that's clearing the way for more Fed rate cuts over the final months of the year.

Inflation eased again in August and moved close to the Fed's 2% annual target, the PCE index revealed. The benign inflation reading in August stemmed largely from the falling price of goods such as gas, autos and electronics. The cost of goods fell 0.2% in August and prices are down about 1% compared to a year ago.

PCE inflation for goods in August 2024 was sharply lower at -0.9% compared to 0.0% in July 2024 and -0.2% in June 2024. Within goods, the durable goods showed further improvement from -2.4% to -2.2% while the inflation in non-durable goods dipped sharply by 120 bps from 1.0% to -0.2%.