Fed rate-hike expectations drop following softer August PCE inflation report

Traders now price in a 65.1% probability that the Federal Reserve will hold interest rates steady at its October 28–29 meeting, while odds of a hike fell to 34.9%. The shift followed Commerce Department data showing the headline PCE price index rose 0.3% month-over-month in August, below forecasts of 0.4%, with the annual rate holding at 3.4%. Core PCE rose 0.2% monthly, undershooting the 0.3% estimate, and held at 3.0% annually. Cooler inflation figures and dovish remarks from New York Fed President John Williams reinforced expectations for a monetary policy pause, supporting equity markets.