Bloomberg Surveillance · Sep 30, 2026
With Stephanie Roth, Chief Economist at Wolfe Research
That morning's PCE inflation report came with big downward revisions, and Stephanie Roth said the Federal Reserve is now fighting core inflation closer to 2.5% than the 3% the headline figures show.
Markets have been pressing the Fed to keep raising rates. Roth said a survey of Wolfe's clients found the latest rise in rates came mostly from oil prices and technical factors, which Fed hikes do little to fix.
"It's a combination of technical factors and oil, so it's not really economic in nature, nor do Fed hikes really solve that — but the market wanted them to hike, and therefore they went ahead and did it." — Stephanie Roth
Stephanie Roth, chief economist at Wolfe Research, on Bloomberg Surveillance, joined the anchors at the table just after the PCE data, the Fed's preferred inflation measure, came out.
The full segment is covered here so you can skip it.
Here are the 4 predictions that matter.
Key Takeaways
The real inflation fight is closer to 2.5% than 3%, once tariffs work through the data, Roth said
The Fed will probably hike at least once more, maybe twice, even though she sees no urgency
Oil and technical factors, not the economy, pushed rates above 5%, according to Wolfe's client survey
Diesel prices will add only a little to inflation, much less than tariffs did
Wolfe expects a soft jobs report on Friday: 70,000 jobs, unemployment at 4.2% and wages up 0.3%
1. Fighting 2.5%, Not 3%
The anchors asked whether the PCE report was news or noise.
The revisions were expected, but they change the picture
Roth said the data was news, even though everyone had been waiting for it. The largest revisions were in two categories.
"The big ones are computer software and portfolio management." — Stephanie Roth
"And now we're in an environment where we're fighting 3% inflation on core PCE. Realistically, over the next couple of months, as the tariffs roll through the data, we're going to see that we're really fighting 2.5% inflation." — Stephanie Roth
Core PCE strips out food and energy. Roth said it is a much different backdrop than last month's headline numbers suggested.
