In brief
U.S. CPI rose 0.4% in October, with core inflation at 0.3% per month, or 3.6% annualized, far above the Federal Reserve’s 2% target. Bond markets reacted sharply, pushing the two‑year and ten‑year yields higher and increasing the odds of a 50‑basis‑point hike at the Fed’s December meeting. Economists weighed the likelihood of a larger move versus a smaller increase, with some noting the inflation data may seal the year‑end hike.
On Tuesday, U.S. consumer prices jumped 0.4% in October, a figure that surpassed the 0.3% forecast of economists, according to the Bureau of Labor Statistics data reported by Xinhua New York, Nov. 10.
The core CPI, which strips out food and energy, advanced 0.3% month‑over‑month, placing the annualized core rate around 3.6%, well above the Federal Reserve’s 2% target.
Shelter costs rose 0.3%, accounting for more than 30% of the overall monthly increase, according to the same Xinhua release.
Fed Governor Christopher Waller, speaking in London overnight, warned that a core price rise of 0.3% or more could justify “a stronger policy move” and that a 50‑basis‑point hike might be considered at the December 8–9 meeting.
"If core prices rose 0.3 percent or more, 'a stronger policy move may be needed,' and that a 50‑basis‑point rate hike should be considered at the Fed's Dec. 8‑9 meeting."
Bond markets responded sharply, with the two‑year Treasury yield surging about 15 basis points above 4.7% – its biggest single‑day jump since April 2025 – and the 10‑year yield climbing to roughly 4.93%.
Market pricing has lifted the probability of a 50‑basis‑point increase at the December meeting to nearly 15%.
Christopher Hodge, chief U.S. economist at Natixis North America, said the third straight 0.3% core reading is an “unacceptable pace for the Fed,” and that “50bps is squarely on the table for the Fed in December.”
"Even if markets are pricing 25 for December, if the November print is high, that could be a good time for a surprise jumbo hike," Hodge added.
James McCann, senior economist at Edward Jones, cautioned that the October print “most likely seals the deal on a hike to close the year,” but a quarter‑point increase remains the most likely outcome as oil prices ease.
"The report most likely seals the deal on a hike to close the year, but a quarter‑point increase remains the most likely outcome," McCann said.
Secondary sources, including the Wall Street Journal and RSM US Economics Blog, report the same 0.4% CPI and 0.3% core numbers, adding weight to the United States' inflation figures.
