Quick Brief – US CPI ticks higher in October as expected, dollar dips slightly
- Headline CPI edges up to 2.6% from 2.4%; Core CPI unchanged at 3.3%
- But rate cut bets for December strengthen
CPI inflation in the United States rose from 2.4% in September to 2.6% y/y in October, while core CPI that excludes food and energy prices remained unchanged at 3.3% y/y. Both were in line with expectations, offering some relief to investors who were spooked by hawkish Fed remarks on Tuesday.
Minneapolis Fed President Neel Kashkari warned that an upside surprise in inflation before the December meeting could be reason for pause. Rate-cut expectations tumbled close to 60% after his comments, but they rebounded to around 85% from the CPI data.
Nevertheless, the odds for a January cut remain quite low, so although the US dollar is giving back some of its recent gains today, the CPI report has done little to alter the greenback’s brighter outlook post the US election.
There’s still one more CPI report to come before the next Fed meeting, as well as the PCE inflation numbers and of course the November jobs data. Thus, a lot could still change leading up to the December 18 decision.
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