CPI sets the stage for more of the same from the Fed in December

The latest data should assure investors that the Fed will continue on its easing path through the end of the year

November 13, 2024 03:36 pm

Federal Reserve Chair Jerome Powell | Federalreserve/"Chair Powell presents the Monetary Policy Report to the Committee on Financial Services:_DSC8752″ (CC license)

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The Consumer Price Index increased 0.2% in October, bringing the annual inflation rate to 2.6% — in line with analyst estimates but still putting prices higher than where the Fed would like.

So-called Core CPI, which excludes volatile food and energy prices, also came in as anticipated, rising 0.3% over the month and 3.3% annually.

The CPI for the 12 months ended in September was 2.4%. This latest reading should assure investors that the Fed, as the latest dot plot had indicated, will continue on its easing path through the end of the year.

Odds of a second 25-basis point interest rate cut in December are now at 82%, up from 58% a day ago, according to CME Group data.

Given today’s unsurprising numbers, the focus now shifts to 2025, when President-elect Donald Trump will move back into the White House and potentially complicate the central bank’s mission with his ambitious economic plans.

The print comes a day before Fed Chair Jerome Powell is scheduled to speak at the Fed Bank of Dallas, so maybe we will get a sense of how he’s thinking about economic policy then. Markets will be listening, and so will we.

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