“A hotter-than-expected inflation number could have convinced the Fed to stand pat at its next meeting,” said Seema Shah at Principal Asset Management. “A December cut is still in the cards.”
Despite the market relief with Wednesday’s CPI report, the latest figures also underscore the slow and frustrating nature of the battle against inflation, which has often moved sideways on its broader path down.
“The in-line CPI print shows that while substantial progress has been made in the fight against elevated inflation, the ‘last mile’ is proving more challenging,” said Josh Jamner at ClearBridge Investments. “With inflation holding steady, the market narrative should not see a significant shift as a result of today’s data.”
It’s a “business-as-usual print” for the Fed, according to Bank of America Corp.’s Stephen Juneau, Meghan Swiber and Alex Cohen.
“There is nothing in today’s report that would alarm the Fed,” they said. “Therefore, a 25 basis-point cut in December firmly remains our base case.”
At Citigroup Inc., economists maintained their view that the Fed will cut rates by 50 basis points in December after the CPI data.
“While details remain volatile and not quite ‘normal,’ easing wage pressures, falling short-term inflation expectations, and high rates continuing to weigh on housing demand and prices should leave Fed officials comfortable that the path of inflation is slowing,” wrote Citi’s Veronica Clark and Andrew Hollenhorst.