US Inflation Eases to 2.4% in September, Strengthening Fed Rate-Cut Bets

US consumer inflation cooled more than expected in September, offering fresh evidence that price pressures continue to ease. The Consumer Price Index rose 2.4% from a year earlier, down from August and the lowest annual pace since February 2021. Economists had expected a 2.6% increase, making the report a welcome surprise for markets and policymakers watching the inflation trend closely.

So-called core CPI, which strips out volatile food and energy prices, also came in softer than forecast. Core prices increased 3.3% year over year, suggesting underlying inflation is moderating even as some categories remain sticky. The data adds to the case that the Federal Reserve may have room to begin lowering interest rates sooner rather than later.

Investors are now increasingly focused on the Fed’s next policy meeting in November, where a rate cut is becoming more likely if inflation continues to cool and labor market conditions remain stable. While the central bank has emphasized that it wants clear evidence inflation is moving sustainably toward its 2% target, September’s report strengthens expectations that policymakers may soon pivot toward easing after an extended period of restrictive borrowing costs.