U.S. core consumer prices rose 0.3% in October, matching a level Federal Reserve Governor Christopher J. Waller had identified before the report as grounds to consider a half-point December increase.
The Bureau of Labor Statistics (BLS) said the core Consumer Price Index (CPI), which excludes food and energy, rose 0.3% from September. That matched the monthly pace in August and September. Headline CPI advanced 0.4% in October after a 0.6% increase in September.
In a Nov. 10 speech in London, delivered before the BLS release, Waller said he favored a 25-basis-point increase at the Federal Open Market Committee (FOMC)’s Dec. 8-9 meeting even if inflation eased. He said a core CPI reading around 0.3% or higher should lead the committee to consider a 50-basis-point increase. Waller warned that limiting an increase to 25 basis points in that situation could “put our credibility at risk.”
Those comments were his own position, not an FOMC decision, and the committee has not announced its December rate choice. EconoTimes previously covered Waller’s case for weighing a larger increase before the October report.
The Fed held its target range at 3.75% to 4% on Oct. 28 in a 10-2 vote, with both dissenters favoring a 25-basis-point increase. Waller supported waiting for more information at that meeting. In his account, economic activity and employment had held up, while inflation remained above the Fed’s 2% objective. He said earlier Fed guidance had already led markets to price in some tightening, giving policymakers room to wait; he has warned that failing to deliver signaled increases could lower rate expectations and ease financial conditions.
BLS data showed payroll employment rose by 165,000 in October and unemployment was 4.1%, little changed from September’s 4.2%. The November employment report is scheduled for Dec. 4, ahead of the Fed meeting. November CPI is due Dec. 10, after the Dec. 8-9 meeting ends.
