Donald Trump has been reelected, but he won’t take office until January. And even then, the effects of the bad policies of the Biden administration will take time to fade away. The latest report on inflation shows that the legacy of Bidenflation persists, as CPI growth accelerated to 2.6 in October. Colby Smith and Harriet Clarfelt report in the Financial Times:
US inflation rose to 2.6 per cent in October, as the Federal Reserve debates whether to cut interest rates at its last meeting before US president-elect Donald Trump takes office.
Wednesday’s figure from the Bureau of Labor Statistics was in line with economists’ expectations of a 2.6 per cent rate of growth and above September’s 2.4 per cent.
Once volatile food and energy prices were stripped out, “core” CPI held steady at 3.3 per cent on an annual basis. However, monthly core prices rose 0.3 per cent for a third month in a row, indicating underlying inflation had yet to be fully tamed.
Alberto Musalem, president of the St Louis Fed, warned in a speech on Wednesday that the risk inflation stalled out above 2 per cent or moved higher had risen, while the risk that the labour market deteriorates quickly had “possibly fallen”.
He reiterated his call for “gradual” reductions in interest rates.
Sarah House, senior economist at Wells Fargo, said Wednesday’s figures showed “it’s difficult to wring out this last bit of inflation”, pointing to the “long tail” of the impact of the Covid-19 pandemic and the persistence of price pressures in services.
The inflation data will be closely watched by the US central bank, which has lowered its benchmark rate by 0.75 percentage points over two successive meetings to a new target range of 4.5 per cent to 4.75 per cent.
Fed officials are trying to reach a “neutral” rate setting that keeps inflation in check without squashing demand, in an attempt to pull off a so-called soft landing that would avoid a recession.
Action Line: Don’t let your guard down on inflation. When you want to talk about your portfolio and preparing for inflation, email me at
ejsmith@yoursurvivalguy.com. In the meantime, click here to subscribe to my free monthly Survive & Thrive letter.
Originally posted on Your Survival Guy.
