The latest inflation data released on Tuesday showed consumer prices rose as forecast in October, maintaining the Federal Reserve's plan to cut interest rates again in December.
The latest data from the Bureau of Labor Statistics released Wednesday morning showed the Consumer Price Index (CPI) rose 2.6% from a year earlier in October, slightly higher than the 2.4% annual increase in September. This annual increase is in line with economists' expectations.
The CPI index rose 0.2% compared to the previous month, similar to the increase seen in September and also in line with economists' estimates.
The "core" CPI index, which excludes the more volatile cost of food and gas, prices in October rose 0.3% from the previous month, the same as in September, and 3.3% from a year earlier for the third month in a row.
Although inflation has slowed, it is still above the Federal Reserve's 2% annual target. In the past three and six months, brought a more complicated picture for the central bank.
For the month of October, the annual rate for the core CPI for the three-month period increased to 3.6% compared to 3.1% previously. The annualized rate for the six-month period remained at 3.3%.
The outlook for inflation remains uncertain as economists warn of the possibility of another rise in inflation following the election of Donald Trump as the nation's next president.
Compared to the current Biden administration, Trump and his proposed policies are seen as potentially inflationary due to his campaign promises that include high tariffs on imported goods, corporate tax cuts, and restrictions on immigration.
In a press conference after the latest rate cut, Federal Reserve Chairman Jerome Powell said that the central bank will not make decisions based on expected policy changes from the new administration.
Immediately after the data was released, markets continued to expect another 25 basis point cut in December, even as the probability investors gave the central bank of keeping rates steady rose to more than 40% from around 30% a week ago, according to CME's FedWatch Tool.
