The producer price index unexpectedly fell by 0.1% month-over-month in September. Excluding food and energy, prices went nowhere.

Economists expected PPI and core PPI to climb 0.1%.

On a year-over-year basis, PPI and core PPI rose by just 1.6%.

All of this confirms that inflation risks remain low. This gives the Federal Reserve room to keep monetary policy loose for a very long time.

In an interview with Reuters on Tuesday, San Francisco Fed President John Williams suggested that low prices could warrant a fresh round of monetary stimulus.

“If we really get a sustained, disinflationary forecast … then I think moving back to additional asset purchases in a situation like that should be something we should seriously consider,” Williams told Reuters.

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