October Inflation Exceeds Forecasts, Fed Decision Uncertain

The U.S. Bureau of Labor Statistics reported that consumer prices rose 0.4% in October, exceeding economists’ 0.3% forecast and renewing attention to whether the Federal Reserve could raise interest rates in December. Core prices, excluding food and energy, increased 0.3%, also above expectations of 0.2%. The figures describe monthly changes; the report did not provide a year-over-year inflation rate.

The overall increase was slower than September’s 0.6% rise. The Federal Reserve has held its benchmark rate at 3.75% to 4.00% after raising it by a quarter point in September and leaving it unchanged in October. The October data do not determine the central bank’s next move.

Federal Reserve Governor Christopher Waller said in London that another core-inflation reading of at least 0.3% could make a half-point increase at the December meeting worth considering. He said a quarter-point move alone could put the Fed’s credibility at risk. His remarks were conditional, and no decision on December rates has been announced.

CME FedWatch data cited in reports showed an 88.3% probability of a quarter-point increase and an 11.7% probability of a half-point increase, as of 16:28 UTC Tuesday....