Central banks
US consumer confidence index slips to 102.5 as FOMC opens policy meeting
US consumer confidence declined to 102.5 in October as energy prices rose, while the Federal Reserve convened for a two-day meeting expected to hold rates at 3.75% to 4.00%.
Key points
- The Conference Board Consumer Confidence Index fell to 102.5 in October from 106.7 in September.
- Rising gasoline prices and inflation expectations tempered household outlook for employment and business conditions.
- The Federal Open Market Committee opened its policy deliberations, with markets expecting a rate pause.
US consumer sentiment retreated in October as households grappled with higher energy expenses and persistent inflation expectations, according to data published by The Conference Board on Tuesday, October 27.
The headline Consumer Confidence Index declined to 102.5 points from a revised 106.7 reading in September. The Present Situation Index, based on consumers assessment of current business and employment conditions, fell modestly, while the Expectations Index slipped further to 78.4, remaining beneath the threshold that historically signals economic friction over the subsequent six to twelve months.
Survey respondents cited rising retail gasoline prices and higher winter heating estimates following the jump in Brent crude past 115 dollars a barrel as key factors dampening personal financial optimism. The survey echoed the University of Michigan findings released last week, which showed year-ahead consumer inflation expectations climbing to 4.7 percent.
The data arrived as the Federal Open Market Committee gathered in Washington for its scheduled two-day monetary policy meeting. Financial markets widely anticipate that policymakers will maintain the target range for the federal funds rate at 3.75 to 4.00 percent on Wednesday, after lifting borrowing costs by 25 basis points in September.
Despite the dip in consumer sentiment, Federal Reserve officials are expected to deliver a resolute policy stance during the post-meeting press conference. Yields on benchmark 10-year US Treasury notes hovered near 4.96 percent on Tuesday, reflecting investor caution that energy-driven cost pressures could delay any potential policy easing well into the coming year.
Trading across foreign exchange markets remained rangebound, with the US Dollar Index holding firm above the 104 handle as investors awaited formal guidance from Federal Reserve Chair Kevin Warsh.
