The October CPI data was broadly as-expected and shouldn’t prevent another cut in interest rates from the Federal Reserve in December.
Inflation has still slowed from where it was earlier this year, and (gradually) softening labour markets argue interest rates are higher than they need to be to get price growth fully and sustainably back to the Fed’s 2% objective even with a resilient U.S. economy and the inflationary impact of a large government budget deficit.
The Federal reserve is still highly data dependent and will see another month of inflation and labour market data before the next policy decision in December. Our own base-case projections expect 25 basis point rate cuts to the fed funds range in December and January, and then a pause for the rest of 2025 at a 4% to 4.25% range. - RBC
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