Consumer prices rose 0.4% in October, more than expected, complicating Fed’s inflation fight
Costs for goods and services rose more than expected in October, providing fresh warning signs for the Federal Reserve in its fight to lower inflation.
The consumer price index, a broad gauge of costs across the U.S. economy, increased a seasonally adjusted 0.4% for the month, the Bureau of Labor Statistics reported Tuesday. Economists surveyed by Dow Jones had been looking for a 0.3% increase.
Stripping out volatile food and energy, so-called core CPI increased 0.3% against the forecast for a 0.2% gain.
The headline CPI had increased 0.6% in September while core was up 0.3%.
The report comes at a critical juncture for the Federal Reserve as it considers its next interest-rate move. Speaking Tuesday morning in London ahead of the CPI release, Fed Governor Christopher Waller said a hot inflation report could push him toward advocating for a half-point increase in December, and specifically said such a hike should be on the table if core CPI was “around 0.3.”
Hours later, that’s exactly what happened.
Traders are now fully pricing in a quarter percentage-point increase when the Fed next meets Dec. 8-9, and put odds of a half-point hike at 13.6%, after being around zero prior to the inflation report, according to the CME Group’s FedWatch tool.
Stocks fell following the release, while Treasury yields jumped.
...
Reply With Quote
