Inflation Spiked Worse-Than-Expected 8.2% In September

Topline

As the threat of prolonged inflation threatens additional rate hikes tanking sectors of the market, consumer prices rose 8.2% in the 12 months ending in September—slowing down for a third consecutive month, but still climbing more than expected in a worrying sign for the broader economy.

Key Facts

Key Background

With prolonged inflation forcing central banks to hike interest rates aggressively this year, pockets of the economy have started to suffer immensely—particularly the housing and stock markets. New home sales plunged to a six-year low this summer, and the S&P 500 has shed about 25% of its value this year—reversing nearly two years of gains. A growing number of economists are worried additional rate hikes could further tank the economy, but Fed officials have remained steadfast in their commitment to lower inflation—even if it means risking a recession. On Wednesday, the Fed said additional hikes would help prevent the “far greater economic pain” associated with high inflation and added that the cost of taking too little action “likely” outweighs the cost of taking too much.

What To Watch For

Fed officials are slated to announce how big the next interest rate hike will be at the conclusion of their upcoming two-day policy meeting on November 2. Comerica Bank forecasts the Fed will authorize another 75-basis-point hike in November, followed by a half-point in December and a quarter-point in February—putting the Fed funds target at a “very restrictive” range of 4.5% to 4.75%.

This is a developing story. Please check back for updates.

Further Reading

S&P 500 And Nasdaq Post New 2-Year Lows After Fed Signals Higher Unemployment May Be Necessary To Tame Inflation (Forbes)

Fed Acknowledges Rate Hikes Will Fuel Unemployment—But Warns Inflation Could Cause ‘Far Greater Economic Pain’ (Forbes)