Meanwhile, markets are expecting with near certainty that the Federal Reserve will codify its fourth consecutive 75 basis point (bps) rate hike next month. As investors await the next bank rate hike, the midterm elections begin on November 8 and reports indicate that inflation is weighing heavily on the minds of most Americans.
Consumer Price Index rises 0.5% in September, Fed raises rate 75 basis points, Democrats ignore complaints about inflation.
On Friday, October 28, 2022, the U.S. Department of Commerce announced that the inflation rate was 0.5% released the latest PCE data for September and the data shows an increase of 0.5% from the previous month and an increase of 5.1% over the past year. PCE is considered the Fed’s preferred measure of inflation because it shows the measure of personal income and personal disposable income (PDI). “Personal income increased by $78.9 billion (0.4%) in September“, the Bureau of Economic Analysis (BEA) said Friday.
The increase in wage growth has been high, in tandem with the latest Consumer Price Index (CPI) report that noted U.S. consumer prices jumped 8.2 percent in September. The most recent data released by the BEA on Friday led analysts to believe that the Fed will add another three-quarters of a percentage point next week. “The level of wage growth is still very high, although it is moving in the right direction“, Laura Rosner-Warburton, senior economist at Macropolicy Perspectives. told the New York Times. The economist added:
This probably puts upward pressure on services inflation.
The markets are almost certain that a 75 basis point hike is in the cards for the next Fed rate hike. However, CNBC financial reporter Jeff Cox says: “Markets think the Fed may slow the pace of its upcoming rate hikes.“According to Jeff Cox’s data, there is a 60% chance that the Fed will go slower in December with a 50 basis point hike. Surprisingly, on October 26, the Bank of Canada raised its benchmark bank rate by 50 basis points when the market was expecting a 75 basis point increase. In addition to the upcoming Federal Reserve meeting, the U.S. mid-term elections begin on November 8, and reports indicate that the Democrats may be punished by voters on inflation.