Nick Timiraos states that the 0.33% month-on-month increase in September's core CPI reinforces the case for another rate hike.

“Federal Reserve mouthpiece” Nick Timiraos stated that in September, underlying inflation exceeded expectations for the second consecutive month, further strengthening the case for another rate hike by the Federal Reserve this year. Last month, Federal Reserve officials unanimously voted to raise rates, and almost all officials at the time anticipated one more rate hike before the end of the year. Excluding food and energy prices, core CPI rose 0.33% month-on-month in September, surpassing nearly all predictions from Wall Street economists. In August, core CPI rose 0.29% month-on-month. This report presents two questions for Federal Reserve officials. The more pressing issue is whether, after officials recently indicated they do not expect to adjust rates at the meeting in two weeks, they can still wait until December to hike rates again. Some analysts believe that if officials ultimately expect to raise rates, there is little reason to continue waiting, although Federal Reserve officials have not yet indicated they will reconsider their policy stance based on a single report. The more important question is how high rates will ultimately need to go. This depends on whether the pressures from rising energy prices and the artificial intelligence investment boom will further spill over into the broader economy.