Interest rate cut expectations are once again under pressure! The U.S. October CPI rose at an accelerated year-on-year rate, with core inflation remaining strong for three consecutive months

According to the Zhitong Finance APP, the potential inflation indicators in the U.S. remained robust in October, highlighting the ongoing risks faced by Federal Reserve officials in their efforts to achieve inflation targets. Data released by the U.S. Bureau of Labor Statistics on Wednesday showed that the core Consumer Price Index (CPI), excluding food and energy costs, rose 0.3% for the third consecutive month, with a year-on-year increase of 3.3%.

Economists believe that core indicators better reflect inflation trends than the overall CPI. The index that includes food and energy rose 0.2% for the fourth consecutive month, with a year-on-year increase of 2.6%, marking the first acceleration in year-on-year growth since March.

The U.S. Bureau of Labor Statistics stated that housing expenditures accounted for more than half of the total monthly increase.

These figures underscore the slow and frustrating progress in combating inflation, with inflation often experiencing lateral fluctuations on a broader downward path. The latest data, combined with strong consumer spending and economic growth, will keep Federal Reserve officials cautious when discussing the pace of interest rate cuts in the coming months.

Additionally, the Federal Reserve will have to contend with a series of new policies under the leadership of newly elected President Trump, who has promised to impose higher tariffs on imported goods, prompting businesses to consider raising prices. After the Federal Reserve cut interest rates by 25 basis points last week, Chairman Jerome Powell stated that the election had "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 rose slightly, while U.S. Treasury yields and the dollar fell. Traders have recently lowered their expectations for future rate cuts by the Federal Reserve. Currently, the market anticipates that the Federal Reserve will cut rates by another 75 basis points by the end of 2025, about 50 basis points lower than expectations prior to the election.

Indicators measuring consumer and business inflation expectations have also risen, which could be a concerning sign after years of strong price pressures.

Used car prices rose 2.7%, the highest in over a year, while hotel prices increased by 0.4%, likely reflecting the damage and evacuation orders caused by hurricanes "Helen" and "Milton." The U.S. Bureau of Labor Statistics updated premium source data, showing that airfare prices continued to rise, and health insurance increased by 0.5%. Motor vehicle insurance saw a slight decline.

The largest category in the services sector, housing prices, rose by 0.4%, accelerating from the previous month. Owners' equivalent rent—also the largest individual component in the CPI—rose by the same magnitude