On Thursday, November 11 at 8:30 AM ET, the Bureau of Labor Statistics will release its latest inflation report in relation to the October 2022 CPI.
While many analysts and market participants hope that the Federal Reserve will start easing its monetary policy in the first half of next year, the sad truth is that the most accurate and current forecast indicates that inflation remains entrenched with the CPI above 8% and PCE above 6%.
The PCE is still three times the Fed's inflation target of 2%. Americans and global citizens are acutely aware that inflation remains entrenched, resilient and high because their data is based on the price they pay for goods and services.
The most recent and accurate inflation data comes from the Federal Reserve Bank of Cleveland's inflation forecast. The Federal Bank of Cleveland publishes daily estimates or forecasts for both PCE and CPI. These figures and graphs are the latest forecasts of the Fed.
According to their website, "The model relies on relatively few variables and is tested using real-time data. The model's nowcasting accuracy improves as information accumulates over the course of a month or quarter, and it easily outperforms a variety of statistical benchmarks."
The image above shows the latest data for November and October 2022. The current inflation forecast now shows that the CPI (Consumer Price Index) rose 0.76% MoM in October and 0.71% MoM in the first week of November. It also shows that inflation continues to be resilient and extremely high, exceeding 8%, with the CPI on an annualized basis in both October and November currently at 8.09%.
It is still too early to predict what the Fed will do at the December 14 FOMC meeting. However, according to the CME FedWatch tool, there is a 52% chance that the Fed will raise rates by 50 basis points and a 48% chance that the Fed will raise benchmark rates by 75 basis points. The base rate will be in the range between 425–450 basis points if the Fed raises rates by 75 basis points.
No matter what action the Federal Reserve takes at its next FOMC meeting, one thing is clear: after five consecutive rate hikes at every FOMC meeting since March, CPI inflation has remained above 8%.
It is hard to imagine that the Federal Reserve will begin to suspend or ease interest rate hikes while inflation remains at a 40-year high.