Hot US inflation report seals Federal Reserve rate increase

Résumé détaillé

A hotter-than-expected inflation report has put new pressure on the Federal Reserve to raise interest rates at its December meeting, and a top policymaker said he expects the Iran…

A hotter-than-expected inflation report has put new pressure on the Federal Reserve to raise interest rates at its December meeting, and a top policymaker said he expects the Iran war to have a lingering effect on energy costs.

US government data on Tuesday showed Consumer Price Index inflation accelerated at a 0.4 per cent monthly pace in October, slower than its 0.6 pace in September but still above estimates.

Core inflation, which excludes the volatile food and energy indices, rose at a 0.3 per cent monthly pace last month, also higher than forecasts. The Bureau of Labour Statistics did not submit a year-on-year measure due to the October 2025 government shutdown.

Traders have virtually locked in odds for the Fed to raise rates in its final policy meeting of the year. About 90 per cent expect the Fed to raise interest rates by 25 basis points, while about 10 per cent expect a larger increase of 50 basis points, according to data from the CME Group.

Driving these odds was Fed governor Christopher Waller, an influential member on the central bank's rate-setting committee, who said before the report's release thaat he would support raising rates by 50 basis points next month if October inflation held firm. It would be the Fed's largest rate increase since 2022.

“Hiking only 25 basis points would put our credibility at risk; a risk I am not eager to take," Mr Waller told an event in the UK.

Karl Schamotta, chief market strategist at Korpay, wrote in a note: “The last consumer inflation update before the Fed’s early December meeting took on added significance this morning when Governor Christopher Waller indicated he would vote for a rate hike."

Dallas Fed president Lorie Logan, another voting member on the Federal Open Market Committee, also added to expectations of a December rate increase when she told an audience in Houston that she supports raising it at least two more times.

“It may be possible to move more rapidly this winter than the FOMC has moved so far this fall,”…

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