U.S. inflation accelerated in October from the pace set a month earlier, raising questions about whether the Federal Reserve will continue to cut interest rates by the end of the year.
The consumer price index rose 2.6% last month from a year earlier, higher than September's 2.4% rise but in line with expectations, the Labor Department said Wednesday.
Month-on-month, the CPI rose 0.2%, in line with economists' expectations, the same rate of increase as last month.
Core inflation, which excludes volatile energy and food prices, rose 3.3% year-on-year in October.
Compared to the previous month, the core inflation rate increased by 0.3%, consistent with the previous month.
Stock futures fell early Wednesday morning as Trump trade momentum cooled and traders turned their focus to the CPI, an indicator of whether the Fed will cut interest rates again by the end of the year.
“US CPI will be a key factor in the Fed's decision next month. This time is especially important, with some speculation that the Fed may skip this meeting and not cut rates.”Germany bank analysts said.
The Fed's next meeting is scheduled for December 17th-18th. Investors currently see a 62.1% chance that the central bank will cut interest rates at its next meeting. According to CME FedWatch.
Inflation has eased significantly from its pandemic-induced peak of 9% in 2022, but hitting the Fed's 2% target could be the hard part, said Beichen Lin, investment strategist at Russell Investments. That's what it means.
“The final stages of the fight against inflation could be full of twists and turns.” Lin told this magazine.. “And this month, markets are anticipating that there may be a brief respite in the fight against inflation.”
Inflation remains above 2%, but the central bank sharply cut its key lending rate by half a percentage point in September and then cut it again by a quarter of a percentage point last week following President-elect Donald Trump's victory. He lowered his budget and turned his attention to employment.
Employers added just 12,000 jobs in October, far more than expected, as devastating hurricanes and a massive strike by Boeing workers wiped out jobs, according to the U.S. Bureau of Labor Statistics. The total number of employees was the lowest since December 2020.
Economists surveyed by Dow Jones had expected payrolls to rise by 100,000, but that would still be a significant drop from September's revised figure of 223,000.
According to government data, the employment rate was unchanged at 4.1%, and the number of unemployed people was little changed at 7 million.
The jobs report, which showed growth well below already weak expectations, could downplay the Fed's success in cutting interest rates and eliminate the economy's so-called soft landing.
However, the U.S. Bureau of Labor Statistics states that “salary employment estimates for some industries… [likely] Affected by hurricanes. ”
