Expectations for interest rate cuts face a new blow! US October CPI accelerates on a year-on-year basis, and core inflation remains strong for the third consecutive month.

The potential inflation index in the United States in October remained strong, highlighting the ongoing risks that Federal Reserve officials face in trying to achieve their inflation target. Data released by the U.S. Bureau of Labor Statistics on Wednesday showed that the core Consumer Price Index (CPI), which excludes food and energy costs, rose by 0.3% for the third consecutive month, with a year-on-year increase of 3.3%. Economists believe that core indicators are more reflective of inflation trends than the overall CPI. This index, including food and energy, rose by 0.2% for the fourth consecutive month, with a year-on-year increase of 2.6%, the first accelerating growth since March. The U.S. Bureau of Labor Statistics stated that housing expenses accounted for more than half of the monthly increase. These numbers highlight the slow and frustrating progress in combatting inflation, which often fluctuates sideways on a broader downward path. The latest data, along with strong consumer spending and economic growth, will keep Federal Reserve officials cautious when discussing the pace of lowering borrowing costs over the next few months. Additionally, the Federal Reserve will have to deal with a series of new policies under the leadership of newly elected President Trump, as he has promised to impose higher tariffs on imported goods, prompting businesses to consider raising prices. After lowering rates by 25 basis points last week, Chairman Powell stated that the election would have "no impact" on the Fed's recent decisions, as it is still too early to know the timing or substance of any potential fiscal policy changes. Following the data release, U.S. stock futures edged higher, while U.S. bond yields and the dollar fell. Traders have recently revised down their expectations for future rate cuts by the Federal Reserve. Now, the market expects the Fed to cut rates by an additional 75 basis points by the end of 2025, about 50 basis points lower than expectations before the election. Indicators measuring consumer and business inflation expectations have also increased, which could be a worrisome sign after years of strong price pressures. Used car prices rose by 2.7%, the highest in over a year, while hotel room prices rose by 0.4%, which may reflect the damage and evacuation orders caused by hurricanes "Helen" and "Milton." The U.S. Bureau of Labor Statistics updated data on premium sources, with airfare prices continuing to rise and health insurance increasing by 0.5%. Auto insurance premiums decreased slightly. The largest category in the service industry, housing prices, rose by 0.4%, accelerating from the previous month. Owner's equivalent rent also the largest individual component of the CPI also rose by the same amount.