US inflation rate fell to 2.4% in September − here’s what that means for interest rates and markets

(The Conversation is an independent and nonprofit source of news, analysis and commentary from academic experts.)

Jason Reed, University of Notre Dame

(THE CONVERSATION) It wasn’t that long ago that the Federal Reserve, the central bank for the United States, was worrying that annual inflation would surpass 9% in the middle of 2022. The U.S. economy hadn’t seen prices rise that fast since the 1980s, and most everyone feared that a series of interest rate hikes would plunge the economy into a recession.

What a difference two years can make.

Inflation cooled to 2.4% in September 2024, according to consumer price index data released by the Labor Department on Oct. 10. That’s down from 2.5% the previous month and in line with market expectations of 2.3% to 2.4%. The inflation rate peaked at 8.9% in June 2022 – a 41-year high.

The news brings the Fed – and its chair, Jerome Powell – much closer to reaching its 2% inflation target. It also marks the fourth straight month that year-over-year price changes have been below 3% and the third consecutive month of declining inflation rates.

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