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US inflation holds steady at 3.7% on an annual basis, although September’s 0.4% rise tops forecasts

With both headline and core US CPI stabilising on an annual basis, markets are pricing in the view that US interest rates are at their peak. But calling the top just yet could be premature.

12 October 2023

US Consumer Price Inflation held steady at 3.7% on an annual basis, rising 0.4% over the month of September. This was a touch higher than the 0.3% rate forecast but lower than the previous month’s 0.6% gain. The core number also held steady at 4.1% annualised, rising 0.3% over the month.

As the preferred measure of inflation used by the Federal Reserve (Fed), they will want to see this number slow further before they can declare their war on inflation over. 0.3% month-on-month inflation is not quite allowing them a victory lap just yet – it would have to be a consistent 0.1-0.2% number for that. Market implied odds for a future hike after this inflation print have moved up very marginally but it is still a low probability. If anything, the markets are pricing that the Fed has now finished hiking. But that may turn out to be a premature assumption.

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Charles Hepworth

Investment Director
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