Inflation was higher than expected last month, dampening hopes for another big rate cut by the Federal Reserve next month.
The Consumer Price Index rose 2.4% in September from a year earlier, slightly ahead of economists' expectations for a 2.3% rise, the Labor Department said Thursday.
Month-on-month, the CPI rose by 0.2%, which was significantly higher than the 0.1% rise expected by economists, even considering August's 0.2% figure.
The “core” inflation rate, which excludes volatile food and commodity prices, rose 3.3% from a year earlier, also exceeding economists' expectations for a 3.2% rise.
Inflation remains above the Fed's 2% annualized target, but the central bank still cut interest rates and shifted attention to the labor market, which had shown signs of weakness before the latest jobs report.
The Bureau of Labor Statistics released a report last week showing that employers added 254,000 jobs to their payrolls in September, far fewer than the 150,000 jobs that analysts had predicted. exceeded.
For the Fed, the much better-than-expected jobs report released last week heightened some concerns that the economy was not cooling enough to slow inflation.
Last month, the central bank slashed its key policy interest rate by 0.5 percentage points, the largest rate cut in four years.
Fed policymakers also signaled they expect two more quarter-point rate cuts in November and December.
The unemployment rate fell one notch from 4.2% in August to 4.1% last month, according to the BLS.
The government also reported that the economy expanded at a solid 3% annual rate in the April-June period.
And it is highly likely that growth continued at roughly the same pace in the just-completed July-September period.
The better-than-expected jobs report led analysts to expect the Fed to cut interest rates by a more modest 25 basis points in November, rather than another “massive” 50 basis point cut.
“We think the bar is high for the Fed not to cut rates at all in November,” said Veronica Clark, an economist at Citi. he wrote in a memo to customers Monday.
“Ultimately, with a still subdued inflation backdrop and a resurgence of weak labor market trends in the coming months, officials will cut interest rates modestly by 25 basis points in November, followed by 50 basis points in December. We anticipate that this will be implemented.”
Stephanie Ross, chief economist at Wolf Research, agreed, saying a 50 basis point rate cut in November was “off the table.”
she She told CNBC that she expected It said the CPI on Thursday “should support” a 25 basis point cut next month.
with post wire
