US inflation rise fuels Fed rate hike expectations
6.6 Macro US inflation rose 0.4% in October, with core at 0.3%, both above forecasts. Driven by housing and food, this boosts expectations of a Fed rate hike in December.
The US Consumer Price Index (CPI) rose by 0.4% in October, exceeding market expectations and signaling persistent monthly inflation. The core CPI, which excludes food and energy, increased by 0.3% for the third straight month, above the 0.2% forecast. Housing costs were the main driver, accounting for over 30% of the monthly change, alongside rises in food, electricity, insurance, and healthcare. Due to the 2025 federal government shutdown, the Bureau of Labor Statistics did not provide 12-month cumulative data for most series, making annual comparisons impossible. In September, the headline CPI had risen 3.7% year-over-year, with the core at 2.6%. These results reinforce expectations of another interest rate hike at the Federal Reserve’s December meeting, with some market participants already pricing in a possible 50 basis point increase. Following the data release, both stock and crypto markets retreated amid concerns over tighter monetary policy.
