US inflation likely remained high last month despite the Federal Reserve’s efforts to control prices that have risen at historic rates.
The Bureau of Labor Statistics’ Consumer Price Index (CPI) for October is scheduled for release at 8:30 a.m. ET on Thursday. Economists surveyed by Bloomberg expect headline reading to show a 0.6 percent faster monthly gain from 0.4 percent in September, in part due to the first spike in energy prices in four months.
The broadest measures are projected to adjust to a 7.9% year-on-year increase, down slightly from September increased by 8.2% over the same period last year. Core CPI, which excludes the volatile food and energy components of the measure, is expected to be 0.5% monthly and 6.5% year over year, little changed from 0. 6% and 6.6% respectively last month – the highest core print since 1982.
The Federal Reserve tracks “core” inflation more closely, which provides policymakers with a more focused view of inputs such as housing. In contrast, the CPI has risen largely along with erratic energy prices this year.
Economists at Bank of America (BofA) expect shelter to be the main driver of October’s key results, as housing costs account for nearly a third of the basket driven by consumer price inflation.
Transportation is expected to remain elevated due to higher airfares and car and truck rentals, while medical care costs are likely to have fallen, BofA noted.
Thursday’s data will provide investors with a hint as to how Fed officials will move forward in the battle to restore price stability after raising interest rates by 75 basis points for the fourth time in a row. in the first day of this month. Investors are now anticipating a reduction in the size of the December rally to a smaller gain of 0.50%.
“It’s not just the continued growth that is troubling, but the spread of soaring prices across a variety of spending categories that have constrained household budgets,” said Bankrate’s director of financial analysis. Greg McBride wrote in a note. “Despite the Federal Reserve’s half-dozen rate hikes, any broad, substantial and sustained easing of inflationary pressures remains elusive.”
The moderation in economic data has boosted hopes that the US central bank will scale back on its positive policy stance, but Fed Chairman Jerome Powell stress At the start of this month, no plans for a pause were made – dashing any such optimism.
“Recovering price stability will likely require maintaining a restrictive policy stance for a while,” Powell said in prepared remarks after last week’s policy-setting meeting, later adding that officials have “some way to go,” with payrolls still growing and inflation not cooling fast enough.
Federal Reserve officials have repeatedly signaled that the size and extent of the spike could slow even though the fight against inflation is far from over, raising the possibility of a hike in its key policy interest rate. higher than expected.
A wave of Wall Street strategists have raised their bets on how much the central bank will eventually raise its federal funds rate – and October’s CPI could confirm established estimates. Revision.
Goldman Sachs was the first of the big banks in the days leading up to the November FOMC meeting to warn interest rates could soar as high as 5% in March 2023.
After Friday The work report is better than expectedEconomists at Bank of America have revised up their forecast for a closing rate of 5.0-5.25% from 4.75-5.0% and said the institution anticipates an increase in 0.50% for December.
TD Securities raised its base rate forecast from 4.75%-5.00% to 5.25%-5.50% and sees a 50 basis point increase in its next meeting on 13- December 14. BNP Paribas is expected to increase 75 basis points for the fifth time next month and terminal funding of 5.25% in the first quarter of next year.
“We think the risks to our revised FOMC rate path continue to trend upward and the upcoming prints on CPI inflation and the November jobs report will weigh heavily on the roadmap. short-term for Fed policy,” strategists led by Michael Gapen wrote in the Friday Notes.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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