The Federal Reserve may have essentially achieved its inflation target.

The Personal Consumption Expenditures Price Index released by the U.S. Department of Commerce later this month will show that the year-over-year increase in this inflation indicator is expected to be 2.04%. If the forecast is correct, then this number will round to 2%, exactly in line with the Federal Reserve's long-term inflation target.

Goldman Sachs' forecast for the PCE Price Index is also essentially consistent with the tracking data from the Cleveland Fed. The Cleveland Fed's "Inflation Nowcast" shows that the 12-month overall PCE inflation rate for September is 2.06%, rounding to 2.1%. On an annualized basis, the inflation rate for the entire third quarter is only 1.4%, which is far below the Federal Reserve's 2% target.

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However, Goldman Sachs estimates that the core PCE inflation rate, excluding food and energy, is expected to be an annual rate of 2.6% in September, which is significantly higher than the Federal Reserve's 2% inflation target. Using only the Consumer Price Index (CPI) to calculate, this Thursday's CPI report shows that the core inflation rate in September was even worse, reaching 3.3%.

Yesterday, the well-known financial journalist Nick Timiraos, known as the "New Fedwire," stated that preliminary estimates show that the Federal Reserve's preferred inflation indicator - the core Personal Consumption Expenditures Price Index - will rise less in September than the CPI.

It should be noted that although the Federal Reserve will refer to multiple data to make decisions, the Personal Consumption Expenditures Price Index is its preferred inflation indicator. Among them, the core inflation rate is the indicator that the Federal Reserve believes can better measure long-term trends.

Current Federal Reserve officials believe that the unexpected rise in housing inflation data is the main driver of the high core inflation indicator. They believe that as the trend of cooling rents gradually emerges in the data, related inflation will ease. Federal Reserve Chairman Powell said in late September when discussing the rent issue that he expected housing inflation to continue to decline, and the broader economic conditions also laid the foundation for further inflation cooling.

This week, the United States announced two major inflation data for September, CPI and PPI. The year-over-year and month-over-month increases in the overall CPI and core CPI both exceeded expectations, but the CPI year-over-year increase of 2.4% still set the lowest since February 2021. The PPI was flat month-on-month, indicating further cooling of inflation.

Analysis points out that although the September CPI and PPI inflation data are mixed, the final readings are still close to expectations, indicating that U.S. inflation is moving towards the Federal Reserve's 2% target, and the Federal Reserve is approaching its inflation target.

However, it can be affirmed that from the mixed inflation data announced in September, it is still necessary to be vigilant, and Federal Reserve policymakers still have some work to do.PNC Senior Economist Kurt Rankin said after the release of the PPI data: "Aggressive monetary easing could cause a surge in consumer demand just as it stabilizes and reaches a sustainable level. This result, in turn, puts pressure on businesses to meet demand, thereby reigniting an increase in their own costs as they compete for the necessary resources to satisfy demand."

Yesterday, Atlanta Fed Chairman Bostic, a voting member this year, said that based on the recent mixed data, he is absolutely open to the idea of pausing rate cuts in November.

After two major inflation data releases this week, traders are almost certain to bet that the Federal Reserve will lower interest rates by a quarter of a percentage point at its November and December meetings.