US September CPI likely locks another 75 bps rate hike at next FOMC meeting – Wells Fargo

US inflation data released on Thursday triggered sharp moves across financial markets. According to analysts at Wells Fargo, today's report likely locks the Federal Reserve into another 75 basis points rate hike at its next meeting in November. They point out that past November, they are confident that inflation should move discernibly lower in the coming months. 

Key Quotes: 

“The Consumer Price Index rose 0.4% in September, once again coming in above consensus expectations and demonstrating that inflation continues to bear formidable momentum. Excluding food and energy prices, core CPI inflation rose 0.6% in September and 6.6% over the past year—a fresh cycle high. Lower gasoline prices once again put downward pressure on inflation.”

“Gradually slowing inflation as well as increasingly tight monetary policy should give the FOMC the breathing room it needs to slow the pace of tightening from its current 75 bps per meeting trajectory. However, there are likely to be some bumps along the way that keep the Fed's guard up over the next few months.”

“Lower gasoline prices have been a powerful balm on inflation this summer, but in recent weeks gas prices have again headed higher in a still-fraught geopolitical environment. Moreover, with core CPI running at a 6.0% annualized pace the past three months, there remains a long way to go before the trend in inflation reaches a pace the Fed can live with.”