US inflation adjusted to what was expected in October. The CPI advanced 2.6% year-on-year last month, two tenths more than in September and in line with what analysts expected. The CPI underlyingwhich excludes energy and food, which are always more volatile, was 3.3% year-on-year, also sticking to expert forecasts. The same happened with the inter-monthly rates, of 0.2% in the general index and 0.3% in the underlying one.
These readings are compatible with a new rate cut by the Federal Reserve in December. After the ‘jumbo’ cut of 50 basis points in September and 25 basis points in November, there were doubts that there could be another standard in December. Although headline inflation has picked up slightly and core inflation has remained stagnant in October, The fact that there has been no upward surprise leaves room for the Fed for this new cutanalysts not ruling out a pause in January. Although inflation is not coming down as quickly as wanted and the economy remains strong, the cooling of the labor market and the fact that monetary policy remains restrictive give the Fed room. “There is not much in the report that could alter the Fed debate. Boring fact“, says analyst Andreas Steno Larsen, formerly of Nordea.
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