New York·Shanghai markets focus on PCE price index and remarks by Fed officials

This week, the New York stock market is expected to pay attention to inflation data and public remarks by officials of the U.S. central bank (Fed).

The Fed, at the regular Federal Open Market Committee (FOMC) meeting on the 17th–18th, cut the benchmark interest rate by 0.25% point and indicated the possibility of two additional cuts within the year. This was because, although the economy is not in a recession, employment is cooling rapidly.

However, depending on the August personal consumption expenditures (PCE) price index to be released on the 26th, the pace of rate cuts could change. Fed Chair Jerome Powell said at a press conference after the FOMC that inflation from tariffs would be temporary, but if inflation measures come out higher than expected, that outlook could be derailed. According to a survey by financial data provider FactSet, the August PCE price index is estimated to have risen 0.3% month-on-month. That is higher than the previous month's increase (0.2%). The core PCE price index, which excludes volatile food and energy, is estimated to have risen 0.3% month-on-month. The previous month's figure was also a 0.3% increase.

Public remarks by Fed officials are also likely to attract market attention. With the FOMC meeting concluded, key Fed officials will explain their views on the interest rate path. Wall Street is also concerned about the possibility of a U.S. federal government shutdown. On the 19th, Congress failed to pass a temporary budget to prevent a temporary suspension of federal government operations (a shutdown). The budget bill passed by the House was rejected in the Senate.

On the Shanghai market, attention is on the People's Bank of China's decision on the benchmark interest rate on the 22nd. In a Reuters survey of 20 market experts, all 20 expected a hold. However, the continued signals that China's economy is slowing are a variable.

New York=Shin-young Park, correspondent nyusos@hankyung.com