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U.S. consumer price inflation rose in October, meeting forecasts and lifting Wall Street indexes on Wednesday, while boosting the dollar close to levels against the yen that have raised concerns at the Bank of Japan.
This inflation data, specifically a rise in the annual rate, has prompted speculation that while the Federal Reserve might be poised for another 25 basis point rate cut in December, it could also reconsider the pace of easing in 2025 if inflation remains persistent. Since September, the Fed has implemented a full percentage point reduction.
Image Source: Reuters
This inflation data, specifically a rise in the annual rate, has prompted speculation that while the Federal Reserve might be poised for another 25 basis point rate cut in December, it could also reconsider the pace of easing in 2025 if inflation remains persistent. Since September, the Fed has implemented a full percentage point reduction.
Markets are now closely watching for insight into how the Fed might interpret October’s 0.2% monthly CPI increase — the fourth in a row — and the rise in annual inflation from 2.4% in September to 2.6%.
Fed Chair Jerome Powell is set to deliver a speech on the economic outlook at 3:00 p.m. EST (1700 GMT) on Thursday, followed by a Q&A session. By then, Powell will also have reviewed the October producer price index report, released Thursday morning, which informs the Fed’s preferred inflation gauge, the personal consumption expenditures (PCE) price index due later this month.
Image Source: Reuters
Image Source: Reuters
Meanwhile, Bitcoin surged past USD 93,000, as cryptocurrencies continued to outperform other assets. Since the Nov. 5 election, Bitcoin is up 32%, trading recently at USD 91,910, with smaller cryptocurrencies like Ether up 37% and Dogecoin, supported by Trump-ally Elon Musk, soaring over 150%.
U.S. President-elect Donald Trump had endorsed digital assets during his campaign, vowing to make the U.S. the “crypto capital of the planet” and amass a national Bitcoin reserve.
In foreign exchange, the dollar rose to 155.62 yen, the highest level since July 24, which could prompt intervention from Japanese authorities. With the Fed’s potential shift on easing taking center stage, the Bank of Japan’s next rate hike timeline has taken a back seat, despite Japan’s October wholesale inflation jump making that decision more challenging.
Recently, Japan shifted from a deflationary outlook to inflation concerns, ending negative rates in March. BOJ Governor Kazuo Ueda has signaled readiness for further hikes if inflation persists or the yen weakens further.
Elsewhere, the euro fell to near a yearly low against the dollar, and the euro/yen rate held steady at 164.33. U.S. officials also announced that President Joe Biden will meet Chinese President Xi Jinping in Peru on Saturday, likely for the last time as Beijing prepares for a potentially tougher relationship under Trump’s administration.
Concerns are mounting as Trump appears set to fill his cabinet with China hawks like Senator Marco Rubio for Secretary of State and Representative Mike Waltz as National Security Advisor.
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U.S. Inflation Slows, Fed Rate Cut Path Uncertain
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