VOLUME 220: WEEK ENDING OCTOBER 12, 2024

The larger-than-expected increase in the September Consumer Price Index (CPI) does not signal a renewed surge in inflation, nor will it prevent the Federal Reserve from proceeding with a 25 basis point rate cut at its November meeting. The Fed remains focused on returning interest rates to a neutral stance to guide the economy toward a soft landing.

While the CPI data might seem to reduce the likelihood of a November rate cut, the Fed has grown more confident in the overall inflation trajectory and is prepared for occasional fluctuations. For now, labor market dynamics, particularly initial jobless claims, are likely to weigh more heavily on the Fed’s decision-making than the CPI numbers alone.

Source: Oxford Economics, Trading Economics