The stronger-than-expected in rise in the core CPI in October was similar to September’s in that it was broad based. This cements a December hike, with the strength of inflationary pressures in the last two months raising the risk that the FOMC opts for a larger 50bp move rather than 25bp, as the typically centrist Governor Waller has suggested could be a possibility in a hawkish speech today. That said, our sense is that the majority of the FOMC would still favour the more gradual move.
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