Bitunix Analyst: Core Inflation Stays High for Three Months — Fed Debate Heats Up Over Hike Size

November 11 — U.S. October CPI rose 0.4% month-over-month, above the market expectation of 0.3%. Although slower than September's 0.6%, core CPI still rose 0.3% month-over-month, maintaining the same gain for three consecutive months and failing to ease to 0.2% as expected. Housing prices rose 0.3%, contributing more than 30% of the overall increase, while food and energy prices rose 0.5% and 0.7%, respectively. Due to missing base-period data caused by last year's government shutdown, the year-over-year rate still cannot be calculated this time, making the persistence of core prices the focus of policy judgment.

More notably, inflationary pressure is not concentrated in a single category. Prices for medical care, recreation, auto insurance, and some services continued to rise. Although used-car prices fell 1.2%, that was still insufficient to offset pressure from other components. The annualized gain in core CPI over the past three months has risen to 3.7%, reflecting that price momentum has not yet effectively cooled. This has also amplified hawkish voices within the Federal Reserve: Waller believes the data meet his threshold for considering a 50-basis-point rate hike in December, and Logan advocates at least another cumulative 50 basis points of tightening; however, Paulson still prefers a gradual approach, indicating that the disagreement is mainly over the pace of tightening rather than whether inflation needs to be addressed.

Markets quickly reflected policy risk. The two-year U.S. Treasury yield rose 19 basis points in a single day to 4.75%, and the dollar strengthened in tandem. A 25-basis-point rate hike in December has become the market's main expectation, while 50 basis points remains a low-probability option. On the other hand, Bowman warned that if AI investment fails to deliver expected returns, it could trigger a correction in equity valuations and raise financing costs in private markets. The Fed therefore faces dual pressure: tightening too slowly may allow inflation to persist, while raising rates too quickly may exacerbate financial market fragility. For the crypto market, if the dollar and short-end yields remain elevated due to tightening expectations, liquidity for risk assets will continue to be constrained; the key going forward is whether services inflation cools and whether employment data can support a more aggressive policy path.