U.S. Inflation Climbs 2.6% in October, Fed's Rate Cuts Show Gradual Impact
U.S. inflation rose to 2.6% in October, marking a small yet significant increase compared to September's 2.4% rate. This uptick follows two rate cuts by the Federal Reserve aimed at managing price pressures amidst a slowing economy and signs of cooling in the labor market. Economists polled by FactSet had forecasted this rise, indicating the Fed’s strategy might need time to show desired effects.
?? Housing Costs Lead the Surge
A major contributor to October’s inflation bump was the housing sector. Shelter prices, increasing by 0.4% in October, accounted for nearly half of the month’s CPI growth. The report also pointed to higher transportation costs, including a 14% annual increase in auto insurance and rising airfares, adding pressure on consumers’ budgets.
?? Fed's Future Moves
Despite October’s inflation rise, the Federal Reserve is likely to proceed with a third rate cut in December. With core inflation in line with expectations, this reduction may help stabilize prices. According to experts, continued rate cuts should aid the Fed in eventually reaching its 2% inflation target, even if the path forward remains uneven.
???? Trump's Policies and Potential Inflation Impact
Looking ahead, Trump’s economic policies, such as broad tariffs and stricter immigration, could further impact inflation, potentially raising it by as much as 1% to an annual rate of 3.6%, which could challenge the Fed’s 2% target and reshape future policy decisions.