The upcoming economic highlight for markets, economists, and policymakers is the U.S. inflation data for October. The focus on this data stems from the potential implications for the Federal Reserve’s decision-making. If the trend of cooling price pressures observed since the summer continues, it might provide the Fed with the leeway to abstain from further interest-rate hikes. Investors and analysts will closely scrutinize the inflation figures for insights into the broader economic trajectory and potential implications for monetary policy.
No economic reports matter more for the Federal Reserve’s interest-rate policy outlook than consumer inflation data. Inflation has been trending down since the summer, but many economists are wary that most of the progress was low-hanging fruit, and that it will take a lot to get back to the Fed’s 2% target. Fed Chairman Jerome Powell raised this concern in remarks on Thursday, saying the central bank was concerned about inflation “head fakes.”
Economists polled by the Wall Street Journal expect headline CPI to moderate to a 0.1% rise in October, down from a 0.4% gain in the prior month, and the smallest increase since May.
There are just under 20 public remarks from Fed officials scheduled this week. One of the highlights will be Chicago Fed President Austan Goolsbee’s moderated question-and-answer session before the Detroit Economic Club. The upcoming economic
Goolsbee, who joined the Fed at the beginning of the year, is comfortable speaking in public and on television from his days in the Obama administration, and afterwards as a pundit. His views also carry weight because he will be on any short list of potential replacements for Powell if President Joe Biden wins a second term.
Goolsbee has looked prescient so far. In his first public speeches this summer, he suggested that there could be an improvement in inflation without a big rise in unemployment.