Overview
- New York Fed President John Williams said on Thursday that inflation remains stubborn and the central bank “still has work to do” to bring inflation back to its 2% goal.
- His comments came after a hotter‑than‑expected October CPI that showed headline prices up 0.4% month‑on‑month and core prices up 0.3%, strengthening the near‑term case for tighter policy.
- Financial markets have moved to price a high probability of a 25‑basis‑point rate increase at the Dec. 8–9 FOMC meeting while keeping an outside chance of a 50‑basis‑point move.
- Fed officials are publicly divided over pace and size of further hikes, with some, including Governor Christopher Waller, saying a half‑point could be on the table if inflation stays hot and others urging steady, meeting‑by‑meeting increases.
- The higher‑for‑longer message has pushed short‑term Treasury yields and the dollar higher and pressured gold, and it means consumers may face persistently higher borrowing costs that will hinge on the flow of inflation and jobs data before the December decision.