US inflation in October climbed at slowest pace since January


Inflation grew at the slowest pace since January last month as the Federal Reserve’s interest rate hikes tank sectors of the economy in an effort to cool demand and tame rising prices—a potentially promising sign for consumers as officials gauge when to hit the brakes on their aggressive tightening campaign.

Fairfield, Connecticut: Self Service Pumps At Texaco Gas Station. (Photo by © Erik Freeland/CORBIS SABA/Corbis via Getty Images)

“Inflation has run far hotter for far longer than expected and we have yet to string together any kind of winning streak,” says McBride. “With additional reports on inflation… in the coming days, and another CPI report before the December Fed meeting, there is plenty of opportunity for further disappointment.”

Key Background

The Fed began raising rates as inflation reached a 40-year high in March, but expectations for the pace and intensity of incoming rate hikes have grown more aggressive amid stubborn price gains and criticism that the central bank waited too long to start the hikes. The increases, which work to slow inflation by tempering consumer demand, have already tanked the housing and stock markets: The S&P is down 22% this year, and existing home sales have plummeted more than 20%. However, the labor market and corporate profits have remained largely resilient—justifying the Fed’s aggressive policy to combat inflation despite pockets of the economy already struggling.

What To Watch For

The Fed has just one more policy meeting this year, concluding on December 5. Even though Fed Chair Powell laid out a case for slowing the pace of tightening after the last increase in July, policymakers changed their tune after the CPI reports for August and September both rose more sharply than expected, suggesting the central bank has more work to do before taming rising prices. Goldman Sachs projects the central bank will hike to a top rate of 5% next year—eclipsing the 4.9% projection the Fed issued in September and far higher than its December projections calling for a top rate of 3.1%.

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Further Reading

Job Market ‘Really Strong’ But Showing Signs Of ‘Destruction’: Here’s How Fed Hikes Have Changed Hiring (Forbes)

Fed Chair Jerome Powell—Haunted By The Ghost Of Paul Volcker—Could Tank The Economy (Forbes)