Markets expect the U.S. economy to continue to grow strongly in the third quarter, while inflation is close to, if not below, the Federal Reserve's 2% target

On October 30, according to market forecasts, data released by the U.S. Commerce Department on Wednesday will show that seasonally adjusted and inflation-adjusted third-quarter gross domestic product (GDP) grew at a robust annualized rate of 3%, unchanged from the previous reading. If this expectation comes true, it would mark the 10th consecutive quarter of expansion for the U.S. economy. At the same time, the market also expects the report to show that the core PCE price index slowed sharply to 2.1% in the third quarter from 2.8%, close to the Fed's 2% inflation target. The Fed uses the PCE price index, which is included in GDP estimates, as its main inflation indicator. Another driver of the Fed's policy rate cuts is inflation, with the core PCE price index likely to move closer to the Fed's target in the second quarter. Citigroup expects U.S. GDP growth to come in below expectations at 2.6%, but expects the inflation measure to hit its 2% target for the quarter, a figure that could help solidify a rate cut of just 25 basis points from Fed officials next week.