Institutional Analyst: September CPI Unlikely to Change FOMC Policy Outlook

Michael Brown, an analyst at Pepperstone, said that despite higher-than-expected U.S. inflation data, September's CPI data seems unlikely to materially change the FOMC's policy outlook. He noted, “Despite the stronger-than-expected September jobs report and given continued deflationary progress, a 25 basis point rate cut is expected at each of the remaining 2 FOMC meetings this year, a pace of rate cuts that could continue through 2025 until the federal funds rate returns roughly to a neutral level of around 3% by next summer. Essentially, this is the 'Fed put option' that persists in a robust and flexible form and continues to provide participants with the confidence to move further away from the risk curve while also keeping stock market declines relatively shallow and viewed as a buying opportunity.”