October’s 0.3% monthly rise in core consumer prices has put a larger December Federal Reserve rate increase in focus, after Fed Gov. Christopher J. Waller said that level could warrant considering a half-point move.
The Bureau of Labor Statistics (BLS) said Tuesday that the all-items consumer price index (CPI) rose 0.4% in October, down from a 0.6% increase in September. The index excluding food and energy advanced 0.3% for the third straight month. Food prices rose 0.5%, and energy prices gained 0.7%.
Before the report, Waller said he leaned toward a 25-basis-point increase at the Fed’s December meeting if inflation developed as expected. He said an October core consumer price index (CPI) reading around 0.3% or higher could warrant considering a 50-basis-point increase. The comments reflected his own view, not a decision by the Federal Open Market Committee (FOMC). Waller also said persistent core inflation could put the Fed’s credibility at risk if a smaller increase proved insufficient. He described energy costs passing through to other prices as a risk.
FXStreet reported that TD Securities continues to favor a 25-basis-point December increase, while treating a 50-basis-point move as possible and seeing greater risk of another increase in January 2027.
At its Oct. 28 meeting, the Fed held its target range at 3.75% to 4.00% by a 10-2 vote, with the two dissenters favoring an increase. The September personal consumption expenditures (PCE) price index was 3.6% higher than a year earlier, while the measure excluding food and energy rose 3.1%, the Bureau of Economic Analysis said.
The next scheduled indicators are October producer price data on Friday, Nov. 13, and October PCE data on Nov. 25. The Fed meets Dec. 8-9, with November CPI data scheduled for Dec. 10.
