Delayed September Core PCE Inflation Data Sparks Market Reaction and Credibility Concerns

The delayed September 2025 core PCE inflation data (2.8% YoY, 0.2% MoM) – the Federal Reserve’s primary inflation gauge – was released on December 5, 2025, following a government shutdown-induced delay [1]. While the data came in below expectations, supporting gradual inflation cooling, concurrent Reddit discussions revealed significant public skepticism about its credibility. Key concerns included alleged political interference, notably former President Donald Trump’s August 2025 firing of BLS Commissioner Erika McEntarfer after she released unfavorable hiring data [2].

Market reactions were mild but notable: major U.S. indices posted modest gains (Dow Jones +0.33%, S&P 500 +0.17%, NASDAQ +0.05% [0]). The CME FedWatch Tool showed the probability of a 25bps rate cut at the December 9-10 FOMC meeting surged to 87% post-data, up from ~39% earlier that week [3]. However, internal dissent within the Fed poses a critical counterpoint: five FOMC voting members have opposed rate cuts, raising the risk of unexpected policy outcomes [7].

1. Erosion of Institutional Trust
   : Political interference in the BLS (e.g., firing the commissioner) has eroded public confidence in economic data integrity, which could undermine long-term trust in Fed policy decisions [2].
2. High Market Expectations as a Double-Edged Sword
   : The 87% probability of a December rate cut (per CME FedWatch [3]) creates a risk of significant market volatility if the Fed deviates from these expectations, either by holding rates steady or issuing hawkish guidance.
3. Data Delays Amplify Uncertainty
   : The government shutdown-induced delay in inflation data has prolonged policy uncertainty, making the upcoming FOMC meeting and Chair Powell’s remarks even more pivotal for market direction [1].

• Risks
  :
  • Political interference in economic data could lead to policy missteps by the Fed, as decisions are based on potentially compromised metrics [2].
  • Fed internal dissent increases the likelihood of surprise policy decisions or hawkish language from Chair Powell, which could roil markets [7].
  • Market expectations for a rate cut are already fully priced in, creating downside risk if the Fed fails to deliver [4].
• Opportunities
  :
  • Interest rate-sensitive sectors (real estate, consumer discretionary, utilities) may see continued momentum if the Fed proceeds with a rate cut [6].

The delayed September core PCE inflation data showed inflation cooling below expectations, but public distrust due to alleged political interference casts a shadow over its credibility. Market reactions have been mild, with elevated expectations for a December rate cut, yet Fed internal dissent introduces policy uncertainty. Decision-makers should monitor the FOMC meeting (Dec 9-10) and Powell’s remarks closely, while assessing the long-term implications of eroding trust in statistical agencies. This analysis provides objective market context and risk assessment, not investment recommendations.