11/14/2024

Progress Lowering U.S. Consumer Inflation is Stalling

Federal rate cut pace is uncertain in 2025

U.S. consumer prices increased as expected in October amid higher costs for shelter such as rents, and progress toward low inflation has slowed in recent months, which could result in fewer interest rate cuts from the Federal Reserve next year.

The report from the Labor Department on Wednesday, which also showed underlying inflation continuing to run a little warmer last month, did not change expectations that the U.S. central bank would deliver a third rate cut in December against the backdrop of a softening labor market.

"Progress on inflation has started to stall," said Michael Pugliese, a senior economist at Wells Fargo. "The time is fast approaching when the Fed will signal that the pace of rate cuts will slow further, perhaps to an every-other-meeting pace starting in 2025."

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