Persistent US Core Inflation Prompts Fed Officials to Discuss Faster Rate Hikes
US consumer prices rose 0.4% in October from the previous month, less than in September, but core prices rose 0.3% for a third consecutive month. Fed officials differed on the pace of rate hikes, with some urging consideration of a larger increase. Markets raised their expectations for the number of future hikes after the data was released.
Federal Reserve officials continued to signal interest rate hikes on November 10. After the latest inflation data was released, some officials said the Fed might need to tighten monetary policy faster. Market expectations for the size of a December rate hike shifted accordingly.
A report released on November 10 showed that the US Consumer Price Index rose 0.4% month on month in October 2026, below September’s 0.6% increase, mainly because energy price pressures eased. The core index, which excludes food and energy prices, rose 0.3% month on month for a third consecutive month. Larger than expected increases in the costs of car insurance, public transport and medical services added to the burden on middle and lower income households.
Shoppers at a supermarket in Millbrae, United States.（VietVance）
Before the data was released, Fed Governor Christopher Waller said he supported a 0.25 percentage point rate hike at the December 8–9 meeting; if the core Consumer Price Index rose by 0.3% or more, the Fed should consider a 0.5 percentage point hike. Dallas Fed President Lorie Logan said the current interest rate range of 3.75% to 4.00% remained too low and that the Fed needed to raise rates by at least another 0.5 percentage points before pausing to assess the policy’s impact.
Kansas City Fed President Jeffrey Schmid also regarded controlling inflation as the top priority. Philadelphia Fed President Anna Paulson supported gradual rate hikes to bring inflation back to the 2% target while giving the economy time to adjust to higher borrowing costs; she did not rule out faster action if inflation expectations, wage pressures or core inflation continued to rise.
Financial markets reassessed the path of interest rates. At one point during trading on November 10, the market put the probability of a 0.5 percentage point Fed rate hike in December at 15%, before it fell to about 10% by the close. Traders expected the Fed to raise rates three times, by 0.25 percentage points each time, between then and mid-2027; before the inflation data was released, they had expected two hikes.
Source: VietVance
