Fed perceives inflation as low

In September 2021, after absorbing three months of price hikes that were more than double the Federal Reserve's 2% target, U.S. central bank staff and policymakers shifted from their more passive tone about inflation and began describing it as "elevated." Triggered after the personal consumption expenditures price index used by the Fed to set its inflation target topped 4% in May, June and July of that year, the elevated inflation description remains in the rate-setting Federal Open Market Committee's policy statement to this day, even with the PCE now down to 2.6% and, it seems, still falling. The Fed's policy meeting next week may finally usher the word out the door. If so, it would mark the strongest signal yet that the central bank plans to cut interest rates as soon as September and begin the easing part of its monetary policy cycle, something investors now see as a near-certainty.