October inflation data meets forecasts, keeping Fed on track for December rate cut

Published On Nov 13, 2024, 9:28 AM

The October inflation data has revealed a 2.6% increase in the Consumer Price Index (CPI) year-on-year, which meets analysts' expectations and indicates that inflation is stabilizing. The Federal Reserve is now expected to proceed with a rate cut of 25 basis points in December, as there's an 80% probability of this occurring. Core inflation remains slightly elevated at 3.3% annually, driven significantly by shelter costs, which account for over half of the inflation increase. Overall, while inflation rates have slowed, they remain above the Fed's 2% target, leading to caution about future economic conditions as changes in government policy could affect inflation expectations.

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Given the continued forecasts of a Federal Reserve rate cut and the stability of inflation data, the financial sector, particularly those banks and financial institutions that benefit from lower rates, may see a positive response in their stock prices. The anticipated rate cuts could stimulate economic growth, enabling more borrowing and spending, which may favor financial stocks.

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