June 23, 2024

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Stubborn Core Inflation Helps Explain Some Fed Restlessness

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(Bloomberg) — Underlying US price pressures are seen advancing at a pace that backs apprehension among Federal Reserve officials to signal the all-clear in their inflation-fighting efforts.

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The consumer price index excluding food and fuel, a measure favored by economists as a better indicator of underlying inflation, is seen increasing 0.3% for a third month.

Compared with October of last year, the core CPI is projected to rise 4.1%. That would match the annual advance in September and snap a six-month stretch of slowing price growth.

While considerable progress has been made since hitting a multi-decade high a year ago, the pace of inflation remains elevated and above the Fed’s goal. Having paused tightening at consecutive meetings, leaving the benchmark rate at a 22-year high, policymakers are proceeding deliberately — and not ruling out further increases.

“If it becomes appropriate to tighten policy further, we will not hesitate to do so,” Chair Jerome Powell said Thursday. “We will continue to move carefully, however, allowing us to address both the risk of being misled by a few good months of data, and the risk of over-tightening.”

Read More: Powell Says Fed to Be Careful, Won’t Hesitate to Hike If Needed

Central bankers slated to speak in the coming week include Chicago Fed President Austan Goolsbee and Fed Governor Philip Jefferson.

Tuesday’s CPI report is the first of a heavy slate of US indicators that will provide a glimpse into the economy’s performance at the start of the fourth quarter. Retail sales data on Wednesday are projected to show that consumers dialed back their spending in October after a string of solid monthly advances.

Reports later in the week are likely to show declines in industrial production and housing starts.

Looking north, Canadian will release home sales data for October after prices slipped in September for the first time in six months, weighed down by higher rates.

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2023-11-12 05:28:09

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