Latest PCE inflation data doesn't support another Fed rate hike

With the latest PCE inflation data showing deepening disinflation amidst falling lending growth and M2, any further increase in interest rates would unnecessarily add to the risk of a recession.

While headline PCE inflation rose on an annual basis in August (3.5% vs 3.4% in July), core PCE growth fell (3.9% vs 4.3% in July), with the increase in headline PCE inflation driven by higher gasoline prices.

On a “supercore” basis (which excludes lagging housing costs in addition to food & energy prices), PCE inflation saw 3-month annualised growth fal…