U.S. inflation appears “still firm” based on core data from the consumer-price index but probably still sets the Federal Reserve up for one more interest-rate cut in December before new fiscal policies take shape in 2025, according to BlackRock’s Rick Rieder.
Core CPI, which excludes food and energy prices, rose 0.28% in October and 3.33% year over year, said Rieder, chief investment officer of global fixed income and head of the BlackRock global allocation investment team, in emailed comments Wednesday.
“We find ourselves at a point in time where the range of outcomes for inflation related to recently solid economic growth, to newly elected political officials, and to the consequential potential for higher tariffs and higher levels of growth, etc., has led to an enormous focus” on Wednesday’s CPI report, he said.
The reading suggests core data from the personal-consumption-expenditures price index “will also see a monthly gain that displays considerably lower inflation than we have been used to over the prior years,” Rieder said, “yet an inflation trajectory that has also probably wrung out most of the potential inflation improvement for much of the goods economy and some of the services sector.”
Rieder dug into the CPI report and found that “shelter, transportation services and used cars and trucks … are categories that while having shown tangible improvement over the past few years, are still elevated.” But the report “overall is not out of the realm of what the Fed would consider roughly on a path toward its inflationary target,” he said.
