US Consumer price inflation surprised consensus expectations to the downside. Economists at TD Securities continue to expect the Fed to leave rates unchanged until pivoting to cuts in June 2024.
Consumer price inflation surprised consensus expectations to the downside, with the headline CPI coming in flat MoM in October, down from 0.4% in September, as gasoline prices were a large drag on inflation this month. Prices in the core segment also came in much weaker than anticipated, printing 0.2% MoM. The CPI's ‘supercore’ decelerated to its lowest pace in three months at 0.2% MoM, as good prices came in broadly weaker in October.
Today's CPI report should be a welcome relief for Fed officials: output has been advancing at a firm pace, but price pressures have continued to ebb. This should allow the Fed to be more patient in waiting for the economy to settle down at a slower pace of growth.
Today's data also supports our long-held view that the Fed is likely done with rate increases, and we continue to look for a first rate cut in June 2024.
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