Latest numbers from Consumer Price Index (CPI) Report It comes out tomorrow, and inflation is expected to remain high.
Forecasts expect it to barely fall below 8% y/y Floating on top of it since March.
Specifically, inflation is expected to be 7.9% year-on-year as of October, according to A The median forecast of the 52 economists surveyed by Bloomberg News. Banks including Citigroup, Deutsche Bank, JP Morgan Chase and Wells Fargo have similar forecasts.
This is just a little less than 8.2% in Septemberand well above the Federal Reserve’s 2% target rate.
If that happens, it will likely dampen hopes that the central bank will temper ongoing interest rate hikes over the next several months. This means that the cost of borrowing will continue to increase for consumers, and things like car financing, credit cards and other loans will continue to increase. become more expensive.
“If we take into account this improvement, it puts a low end,” says Greg McBride, chief economist at financial services firm Bankrate. “We’ve had our heads rigged a few times, thinking we’re starting to turn a corner only to see inflation go up again.”
McBride says that while lower inflation would be good news, there will have to be a series of consecutive months of steady declines before we can say inflation is under control.
Core inflation remained runaway
The steady rise in core inflation of 6.6% y/y remains a pressing concern. Core inflation is a broad measure of all consumer prices, except for food and gas, which tend to be more volatile.
Far from slowing, the pace of core inflation is expected to have picked up another half a percent, after rising by 0.4 percent in September.
“The annual base rate of inflation has been up in the last three months and it’s been running at the highest pace in 40 years,” McBride says.
Federal Reserve Chairman Jerome Powell, citing inflation data from last month, said the Fed has “ways to go” to bring down inflation. Hopefully, this will be done through continued hikes in interest rates, which discourage spending.
If Thursday’s report is worse than expected, the probability of a “jumbo” rate increase of another 0.75 percentage point in December is likely. Most forecasts currently assume a December rate hike of 0.5 percentage point, with the probability of 52% as of Wednesday afternoon, according to CME FedWatch Toolwhich measures the probability of a price increase.
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