Fed chair Warsh talked and markets listened. But by the end of it all, everyone pretty much went home with the same hand that they were dealt with in looking to the next meeting in December. So much for a productive Fed meeting, eh?

While yesterday’s decision and press conference didn’t exactly shake things up, today’s US PCE inflation report might have a better shot at doing so.

Traders are currently still pricing in roughly 84% odds of a 25 bps rate hike for December, not all too much changed from the roughly 88% odds before that. And with Warsh tossing the ball back to economic data to decide the state of play, we’ll get to see whether the inflation numbers actually justify the market confidence.

Here is what is expected for the September report later today:

• Headline monthly PCE: +0.5% m/m (Prior +0.3%)
• Headline annual PCE: +3.6% y/y (Prior +3.4%)
• Core monthly PCE: +0.3% m/m (Prior +0.2%)
• Core annual PCE: +3.1% y/y (Prior +3.0%)

If meeting expectations, the numbers will only serve to reaffirm that inflation pressures are still remaining more stubborn. That is especially the case as they wil reflect the narrative that prices are still running comfortably above the Fed’s 2% target.

As is always the case, the core readings will be the more important ones to watch when it comes to inflation data. A hotter set of numbers will only reinforce the market pricing for December and could potentially trigger some jitters across broader market sentiment. On the flip side, a softer reading could get traders questioning whether they’ve become a little too comfortable with the idea of another hike.

But looking at what is priced in, the balance of risks seem to be skewed towards a softer reading at this stage.

Another hot inflation data will do little to really move market expectations for a December rate hike, considering that it is almost fully priced in already. But as for a softer report? Well, that might get traders to doubt themselves a little and bring about a stronger market reaction.

Besides that, don’t forget that we will also be getting the latest personal spending figures alongside the inflation numbers. With consumption expected to rise 0.5% on the month, any surprise there could further complicate the Fed’s balancing act.

So while yesterday’s Fed meeting mainly reaffirmed market expectations for a December move, the PCE report today will offer up the first real test of whether traders will be vindicated for their pricing.

This article was written by Justin Low at investinglive.com.