Inflation in the US, as measured by the change in the Consumer Price Index (CPI), declined to 3.2% on a yearly basis in October, the US Bureau of Labor Statistics (BLS) reported on Tuesday.
US inflation data is important as it has a direct influence on market positioning regarding the Fed’s rate outlook, especially after Jerome Powell, Fed Chair, said that they were not confident that they had achieved a sufficiently restrictive policy stance to bring inflation down to 2%.
Many other signs appeared to show the importance of inflation data, especially for the interest rate at the next meeting, as Fed Vice Chair Philip N. Jefferson said before the release of data today that some measures of economic uncertainty, particularly inflation, are elevated. “The uncertainty around inflation persistence may warrant a stronger policy response than otherwise,” Jefferson added.
At the time of releasing the data, the US Dollar Index was down 0.65% on the day at 105.00. The CPI new release decreases market expectations for a hike in the interest rate at the next policy meeting. The spot gold price increased to 1953.760 at 09:02 EST.