U.S. Inflation Slows, Fed Rate Cuts in Doubt

U.S. consumer prices rose 0.2% in October, with a year-on-year increase of 2.6%. This suggests slower progress towards low inflation, potentially affecting future interest rate cuts by the Federal Reserve. Economists predict higher inflation next year under Trump’s economic policies, impacting future monetary decisions.

In October, U.S. consumer prices rose as anticipated, maintaining a 0.2% monthly increase for the fourth consecutive month, according to the Bureau of Labor Statistics. This trend indicates stalling progress in achieving lower inflation levels, raising questions about the Federal Reserve's capacity for further interest rate cuts next year.

Compared to September, consumer prices are up 2.6% over the past year, matching economists' predictions. This uptick also aligns with last year's low reading being phased out of the annual calculation. Economists caution that inflation could escalate next year if President-elect Trump's economic policies, which include tax cuts and elevated tariffs, are implemented.

While the central bank plans another rate reduction in December, analysts see limited scope for additional cuts in 2024, as U.S. Treasury yields surge amid expectations of unhindered economic policy execution by the incoming administration, which commands congressional support. Nevertheless, inflation remains a focal point, having decreased considerably from its peak in mid-2022 but still exceeding the Fed's 2% target.

(With inputs from agencies.)