top of page

📝 Fed to Keep Guard Up For The Next Couple Of Months: Wells Fargo

Writer's picture: Rosbel DuránRosbel Durán

Today's CPI report should lock the FOMC into yet another supersized 75 bps rate hike at its November 2 meeting. Core CPI inflation has registered a 6.0% annualized rate over the past three months, and it will take a lot more than some gradual slowing before the FOMC feels it has this problem firmly under control.

Services inflation is likely to prove more stubborn. However, private sector rent measures suggest monthly gains in shelter costs should be close to peaking, and with the initial rush of post-COVID "revenge travel" behind us, we anticipate somewhat softer monthly gains ahead in services.

Gradually slowing inflation as well as increasingly tight monetary policy should give the FOMC the breathing room it needs to slow the pace of tightening from its current 75 bps per meeting trajectory. However, there are likely to be some bumps along the way that keep the Fed's guard up over the next few months. Lower gasoline prices have been a powerful balm on inflation this summer, but in recent weeks, gas prices have again headed higher in a still-fraught geopolitical environment. Moreover, with core CPI running at a 6.0% annualized pace the past three months, there remains a long way to go before the trend in inflation reaches a pace the Fed can live with. Supply and demand imbalances in the labor market are an additional source of inflationary pressure that have yet to fully abate. Despite some recent slowing on the wage front, labor costs continue to grow at a pace inconsistent with 2% inflation.

- Wells Fargo


0 comments

Kommentarer


© 2024

CableFXWHITEdropshadow.png
  • Twitter - White Circle

Investing and trading involve risk. This includes the possible loss of principal and fluctuations in value. There is no assurance that objectives will be met. Do not risk capital that you cannot afford to lose.  

bottom of page