The Fed's favorite measure of inflation came in below expectations. How will the market react?

Core inflation in the U.S. rose 2.8% in September, the Personal Consumption Expenditures (PCE) index showed. This figure was below expectations, CNBC points out - some analysts had forecast that the price index for deferred core consumer spending for September would show an annual growth of 2.9%.

The data hasn't been released since late summer due to the U.S. government's 43-day shutdown, which paralyzed most federal agencies for several months.

The previous figure, which was released in August, was 2.9%, indicating a slowdown in inflation. A weaker figure would signal that core inflation continues to decline toward the Fed's 2% target, reinforcing expectations of further interest rate cuts, Bloomberg writes. The agency's meeting on this issue is scheduled for next Wednesday, December 10.

Before the data was released, market participants estimated the probability of a 25 basis point interest rate cut at 87.2%, CME Group's FedWatch Tool shows.

Contracts on the S&P 500 were adding 0.1% ahead of the PCE report, while the tech-heavy Nasdaq 100 was up 0.22%. Dow Jones futures were down 0.08%.

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