The U.S. October CPI significantly exceeded expectations, reaching the substantial interest rate hike threshold mentioned by Waller

Overall and core inflation rates in the U.S. for October exceeded expectations, which may keep the Federal Reserve on track for interest rate hikes next month. According to data released by the Bureau of Labor Statistics on Tuesday, the Consumer Price Index excluding food and energy rose by 0.3% from the previous month. Overall prices increased by 0.4%. Due to the interruption in data collection during the government shutdown last October, the Bureau of Labor Statistics did not release year-on-year changes.

The report shows that price pressures continue to mount ahead of this month's midterm elections, with the Democratic Party focusing primarily on the cost of living to regain control of both houses of Congress. This year, the war in Iran, tariffs, and the boom in data centers have all fueled inflation. This is the last CPI report that Federal Reserve officials will see before the policy meeting on December 8-9. Investors expect that they will raise interest rates at this meeting to address inflation.

Before the release, Federal Reserve Governor Waller stated that if core CPI rises by 0.3% or more, the Federal Reserve may need to raise rates by 50 basis points.