Inflation isn't going away. Here's what that means for interest rates.
Summary
U.S. inflation rose 0.4% in October, exceeding forecasts for a third consecutive month. Several analysts expect the Federal Reserve to raise its benchmark interest rate by a quarter-point at each of its next three meetings, while one Fed governor has called for considering a larger increase.Key Facts
- The October Consumer Price Index rose 0.4%, more than expected.
- Aditya Bhave of BofA Global Research expects quarter-point rate increases at the Fed's December, January and March meetings.
- TD Securities revised its forecast to three consecutive quarter-point increases, citing broader price pressures.
- Gregory Daco of EY-Parthenon expects rate increases in December and January.
- Interest rate traders put the chance of a quarter-point increase at the Fed's December meeting at nearly 90%.
- Fed Governor Christopher Waller said policymakers should consider a half-point rate increase in December.
- High energy prices and corporate spending on data centers and other AI-related equipment are contributing to inflation.
- Higher interest rates generally increase borrowing costs for consumers.
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