'Fed Whisperer': Inflation Higher Than Expected, Further Supporting Another Fed Rate Hike This Year

October 14: Nick Timiraos, a Wall Street Journal reporter known as the "Fed whisperer," said that underlying inflation in September was higher than expected for the second consecutive month, further strengthening the case for the Fed to raise rates again this year. Last month, Fed officials voted unanimously to raise rates, and almost all officials at the time expected one more rate hike this year. Core CPI, excluding food and energy prices, rose 0.33% month-over-month in September, higher than almost all forecasts by Wall Street economists. Core CPI rose 0.29% month-over-month in August. This report presents two problems for Fed officials. The more urgent question is whether they can still wait until December to raise rates again after officials recently said they did not expect to adjust rates at the meeting in two weeks. Some analysts believe that if officials expect to raise rates eventually, there is not much reason to keep waiting, although Fed officials have not yet shown signs of reconsidering the policy arrangement based on just one report. The more important question is how high rates ultimately need to rise. That depends on whether the pressure from rising energy prices and the artificial intelligence investment boom will further spread to the broader economy.