Maybe tomorrow’s report on the CPI inflation rate for October will moive expecations for an interest rate increase from the Federal Reserveat its December 9 meeting.
But it seems unlikely. The CME FedWatch tool is projecting 84.5% odds of a 25 basis point increase. That’s up from 74.4% odds a week ago. It would take a major surprise in the Consumer Price Index to change the market’s sentment.
We’re not likely to get it for two ressons.
First, economists expect Tuesday’s CPI report to show slightly slower monthly inflation in October with headline all-items prices up about 0.3% in the month and core prices—-excluding food and energy—-up 0.2%. That would be a slight dip in the monthly core rate from 0.3% in September. Not enough to change the Fed’s mind, I think most investors will conclude.
Second, there likely won’t be any report on a year-over-year inflation rate because in October 2025 government statisticians did not collect price data due to the government shutdown. Without the annual inflation rate I doubt that investors will get very excited by a small move in the monthly rate.
Especially because the main factor in the drop is a smaller increase in gasoline and other energy prices after September’s sharp increase. Energy prices are volatile, which is why they’re excluded from the core inflation number in the first place.
