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... Yet some signs of inflation pressures remained. Excluding volatile food and energy costs, so-called core prices rose 2.7% in September from a year earlier for the third straight month. On a monthly basis, core prices rose 0.3% from August to September, up from 0.2% from July to August. The increase in the core rate is higher than the Fed would prefer.

Still, for the past six months, core inflation has declined to a 2.3% annual rate, down from 2.5% in August. And economists still expect the Fed to cut its key rate by a quarter-point when it meets next week.

"It's essentially the soft landing that many of us dreamed of," said Gregory Daco, chief economist at the tax and accounting firm EY, referring to a scenario in which high interest rates manage to tame inflation without causing a recession. "You really have the best of both worlds, with consumer spending growth remaining resilient and inflation moving within striking distance of the Fed's 2% target." ...