Morning Market Brief October 11, 2024

The US annual inflation rate ticks lower

The US inflation rate decelerated in September, encouraging news in the US Federal Reserve Board’s (Fed) battle against elevated inflationary pressures. After raising its interest rate aggressively to help pull inflation down, the Fed began lowering interest rates at its September meeting. Despite coming down in September, inflation was above economists’ expectations, raising questions about how quickly the Fed might continue to lower interest rates.

• The annual inflation rate in the US was 2.4% in September, down from the 2.5% rate in August. This was the lowest rate of annual inflation in the US since February 2021. September’s rate was, however, above the 2.3% rate economists had expected, based on a Bloomberg survey.
• Energy prices dropped on a year-over-year basis, as did prices for new and used vehicles. Shelter prices increased but at a slower pace in September compared to August. Food prices accelerated in September.
• The core inflation rate, which excludes volatile items such as energy and food prices, increased to 3.3% in September from 3.2% in the previous month, which was also above economists’ expectations. The rise in core inflation suggests price pressures are broad-based.
• The US labour market showed more signs of deterioration in a data release yesterday. Initial jobless claims in the US rose to 258,000 over the week ended October 5, its highest level in 14 months.

The Fed noted that rate decisions will be based on incoming data. The data has been showing another rate cut might be warranted but might not be as big or as quick as economists had expected after the Fed’s last meeting. The Fed makes its next interest-rate announcement on November 7. As for Canada, more rate cuts from the Fed could help strengthen the Canadian dollar.

At?CIBC Private Wealth , we aim to take a comprehensive approach to managing, building and protecting your wealth. If you'd like to discuss this market and economic update in more detail, please get in touch with your advisor anytime.