In order to get inflation under control, the US Federal Reserve has been raising interest rates for months. In October, the inflation rate fell to 7.7 percent - more than many experts expected.
High inflation in the US eased more than expected in October. Compared to the same month last year, consumer prices rose by 7.7 percent, as announced by the Department of Labor in Washington. On average, analysts had only expected a decline to 7.9 percent. In the previous month, the inflation rate was 8.2 percent. It is the fourth decline in a row.
Core inflation, excluding volatile energy and food prices, fell to 6.3 percent from 6.6 percent. Here, too, the decline was stronger than expected. The US dollar fell across the board after the numbers. US Treasury yields also came under pressure. Because the somewhat weakened upward pressure on prices points to fewer interest rate hikes by the US Federal Reserve in the future.
The Federal Reserve has been raising interest rates in unusually large increments for months to keep inflation in check. Most recently, she increased it again by three-quarters of a percentage point. It is currently in a range of 3.75 to 4.00 percent. The Fed is poised to step up but has signaled that it may soon slow down some of the pace of the tightening moves. US currency watchdog Neel Kashkari, however, called it "completely premature" to talk about a turning point in monetary policy.
Inflation has skyrocketed over the past year as the US economy recovered from the pandemic. Strong consumer spending - fueled by very low interest rates and government stimulus measures - collided with stretched supply chains and pandemic-related shortages. Russia's war in Ukraine has further fueled global inflation and pushed up the prices of food, energy and other commodities.
The main reason inflation has been so persistent is that it has progressively spread from goods to services such as housing, medical care and auto insurance, where inflationary momentum is slow to reverse once it gets going.
