In brief
U.S. consumer prices rose 0.4% in October, with core inflation at a 3.6% annualized pace, far above the Fed's 2% target. The data pushed short‑term Treasury yields to new highs and steepened the market’s odds of a 50‑basis‑point hike in December. Economists warned that a third straight core reading could prompt a surprise jumbo rate increase.
U.S. consumer prices climbed 0.4% in October, with core inflation showing a 3.6% annualized pace, according to the Bureau of Labor Statistics data released Tuesday.
The headline CPI rose 0.4% after a 0.6% increase in September, surpassing economists’ 0.3% forecast. Core inflation advanced 0.3% month‑over‑month, giving the core index an annualized rate of roughly 3.6% and putting it well above the Federal Reserve’s 2% target.
Short‑term Treasury yields spiked after the release, with the two‑year yield surging to above 4.7%—its fastest single‑day rise since April—and the 10‑year yield climbing to around 4.93%.
Fed Governor Christopher Waller said in London that if core prices rose 0.3 percent or more, “a stronger policy move may be needed,” and that a 50‑basis‑point hike should be considered at the December 8‑9 meeting.
"A stronger policy move may be needed," Waller told reporters.
Chief U.S. economist Christopher Hodge described the third straight core reading as “an unacceptable pace for the Fed,” adding that “50bps is squarely on the table for the Fed in December.”
"50bps is squarely on the table for the Fed in December," Hodge said.
Senior economist James McCann noted the report likely seals the deal on a year‑end hike, though a quarter‑point increase remains the most likely outcome as oil prices ease.
