US Inflation to Cool Only Slightly, Keeping Big Fed Hike in Play

US inflation probably moderated just slightly in October data due Thursday, and yet another above-forecast reading may dash expectations for the Federal Reserve to downshift from steep interest-rate hikes.

Economists project the consumer price index and the core measure that excludes food and energy both cooled on an annual basis, but to rates still consistent with persistent and elevated inflation. The overall CPI is seen rising from a month earlier by the most since June.

Inflation gauge Median estimate
CPI MoM +0.6%
CPI YoY +7.9%
Core CPI MoM +0.5%
Core CPI YoY +6.5%

That’s keeping a fifth-straight 75 basis-point increase in interest rates on the table for the Fed’s meeting next month, though traders are leaning more toward a half point. Also, rising prices have pushed the Fed to eye a higher peak rate next year than officials were projecting a couple months ago.

Either way, a still-tight labor market underscores what’s likely to be a relatively slow decline in the coming months for inflation, which has been a major factor in this week’s midterm elections. The overall annual inflation rate exceeded forecasts in six of the prior seven months.