US CPI: Inflation in October Kicks Up to 2.6%. Is a Fed Rate Cut Still on the Table?

The short answer is “yes.” The long answer is “well, it’s a bit complicated, especially if Trump starts getting nosy ahead of his official inauguration.”

• The consumer price index USCPI ticked up to 2.6% in October from a year ago in a move that rattled the financial markets after many months of cooling price pressures. The clip is also up from the previous month’s annual inflation rate of 2.4%. It did, however, meet Wall Street expectations so it was more or less baked into prices left and right. With that, is a cut by the Federal Reserve still in the cards?
• The Fed has communicated previously that it expects to cut interest rates by a casual 25 basis points in December when officials meet one last time before the turn of the year. But since the central bank is largely data-dependent, policymakers are allowed to change their mind. And this is highly likely in case things derail and turn out worse than expected. Analysts, though, are fairly certain that the Fed will go on and slash rates again in December.
• But a new player has entered the chat. Donald Trump, President-elect, is getting ready to be inaugurated as the 47th US President on January 20. He has indicated solid interest in turning things upside down and inside out and could start meddling with the Fed and its Chair Jay Powell’s decisions. At the last Fed meeting, however, Jay Powell stood his ground and said that he wouldn’t resign if Trump asked for it.