Chief investment strategist at Northwestern Mutual Wealth Management Brent Schott and Raymond James Washington political analyst Ed Mills discuss the directions the market will follow after the midterm elections in “Claman Countdown.”
The risky inflation report due on Thursday is expected to show that the fight to keep rising consumer prices under control is still long.
The Labor Department will release its highly anticipated CPI report Thursday morning, providing fresh insight into how inflation rose in October.
Economists expect the gauge, which measures a basket of goods including gasoline, health care, groceries and rent, to show prices rose 0.6% from the previous month — up from a 0.4% reading in September. on an annual basis, Inflation forecast It jumped 8%.
The report is likely to show the primary impetus for inflation with rising house prices and rents. Core prices, which exclude the most volatile measures of food and energy, are expected to rise 0.5% from the previous month and 6.5% from the same period last year.
The Union’s war on inflation could cost a million jobs
US Federal Reserve Chairman Jerome Powell speaks during a press conference on interest rates, economics actions and monetary policy at the Federal Reserve Building in Washington, DC on June 15, 2022. (Olivier Doolery/AFP via Getty Images/Getty Images)
While consumers have recently had a modicum of relief from inflation in the form of lower gas prices, the latest CPI reports are likely to show that food and rent costs have risen significantly. This is a worrying development because the rising costs of housing and food are directly and severely affecting family budgets.
He said, “It is not only the continuous pace of increase that is worrying, but the spread of price increases across different spending categories that has affected household budgets.” Greg McBride, chief financial analyst at Bankrate.
The report will also have significant implications for Federal Reservewhich is tightening monetary policy at the fastest rate in decades as it tries to calm consumer demand and reduce out-of-control inflation.
Policymakers in October approved a fourth straight rate hike of 75 basis points, raised the federal funds rate to a range of 3.75% to 4% — to restrictive levels — and signaled more increases were coming.
The rising expectations on Wall Street are that the Federal Reserve will cause an economic downturn as it raises interest rates at the fastest pace in three decades to keep pace with hyperinflation.
“The chances of a soft landing will likely diminish to the point where policy needs to be more restrictive or restrictive for longer,” Fed Chairman Jerome Powell said last month. “However, we are committed to bringing inflation back to 2%. We believe that failure to restore price stability will mean much more pain.”
If October inflation data is hotter Than expected, it could raise the odds of a rate hike further when the Federal Reserve meets in December and becomes a more aggressive central bank in the coming months.
“Despite the Fed’s half-dozen rate hikes, any broad, significant and sustainable easing of inflation pressures remains elusive,” McBride said. As a result, Fed Chairman Jerome Powell says there are ‘ways to be taken’ in raising interest rates to a level that dampens demand enough to control inflation.
A customer shops at a supermarket in Millbra, California, August 10, 2022. (Li Jianguo/Xinhua via Getty Images/Getty Images)
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The Fed also monitors other economic indicators, including job growth and consumer inflation expectations. In a potentially worrying sign, job growth was advancing at a healthy pace, despite the central bank’s efforts to cool the labor market.
“We still have some ways to go,” President Jerome Powell to reporters last week. “And the data from our last meeting suggests that the final level of interest rates will be higher than previously expected.”
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