Core CPI Exceeds Expectations Again, Fed Hawks Loud! 2027 FOMC Voting Member Directly Calls Inflation Hot

According to Zhitong Finance APP, the October U.S. core CPI inflation data once again exceeded market consensus expectations, and Federal Reserve officials’ patience with “price pressures fading on their own” seems to be waning. Austan Goolsbee, FOMC voting member in 2027 and President of the Chicago Fed, described the latest inflation report as “worrying, almost excessively hot and deeply unsettling” in an interview on November 10. His main concern is that tariffs and energy shocks have not sufficiently dissipated, while service inflation remains persistently high.

However, he did not explicitly support a 50 basis point rate hike in December, emphasizing instead that no policy options should be precluded in advance. Goolsbee does not have voting rights in 2026 and will rotate into voting in 2027. Specifically, overall U.S. CPI rose 0.4% month-over-month in October, lower than September’s 0.6% but still above the 0.3% expected by the market; core CPI increased by 0.3% month-over-month, maintaining this pace for a third consecutive month and again exceeding the expected 0.2%.

Although the latest inflation prices show that the rise in energy prices—around vehicles, diesel, and other petroleum products—narrowed from 5.2% to 0.7%, prices of food, housing, and medical care continue to climb, with transportation services rising 0.8%. The key takeaway from this data is that, although oil price-driven energy inflation has slowed, it has not yet led to further improvements in core inflation, and the price levels borne by consumers continue to rise.

Whether waiting for supply shocks to dissipate can resolve inflation depends on whether the price increases remain concentrated in a few affected industries. Once pricing pressures spread to broader services and gradually influence corporate pricing and wage negotiations, falling oil prices alone will not be enough to restore price stability. Meanwhile, October’s nonfarm job gain of 165,000 and an unemployment rate dropping to 4.1% reduce the urgency for officials to immediately address any employment downturn, allowing inflation control to take higher priority.

Fed’s Goolsbee Calls October CPI Report ‘Unsettling’

Chicago Fed President Austan Goolsbee stated in an interview that officials must contend with persistently high inflation, calling the October consumer price report unsettling.

“Yet another troubling report—almost excessively hot inflation that’s very concerning,” Goolsbee said during a Tuesday interview with PBS NewsHour. “We’ve been hoping to see more progress.”

Goolsbee noted that he had expected several drivers of higher prices, including tariffs and high energy costs, to have dissipated by now. He added that service inflation has remained elevated, saying this is “perhaps the most worrisome part.”

Earlier Tuesday, data from the U.S. Bureau of Labor Statistics showed core consumer prices, which exclude food and energy, rose 0.3% month-over-month in October—exceeding expectations for a third straight month. Before the report was released, Fed Governor Christopher Waller warned in a speech in London that if inflation did not improve, officials might need to consider a 0.5 percentage point rate hike at the December meeting.

Asked about the likelihood of a larger rate increase, Goolsbee said he does not like to tie officials’ hands before policy meetings.

“I have to say, the table in that room is truly the largest I’ve ever seen in my lifetime. So, all options are always on the table,” said Goolsbee, who is not voting on rates this year. “We must get inflation back to target, and right now, it’s headed in the wrong direction.”

Waller Opens the 50 Basis Point Option, Market Begins to Reassess 2027 Rate Path

FOMC permanent voting member and Fed Governor Christopher Waller set clear thresholds in a November 10 speech in London: Even if inflation shows improvement in October, he still leans toward a 25 basis point hike in December; if core CPI rises by about 0.3% or more month-over-month, a 50 basis point hike should be considered. The speech took place before the data release, which subsequently met this condition. He is concerned that under persistent and spreading price pressures, insufficient action could damage the Fed’s credibility in fighting inflation.

As a result, the option for a 50 basis point Fed hike in December has become a data-supported topic in the rate futures market, though it has not yet been made an official FOMC rate decision.

Lorie Logan, FOMC voting member in 2026 and President of the Dallas Fed, stated on the same day that at least two more hikes of 25 basis points each are needed and that the pace of action might be quicker in winter than in autumn. She considers current policy to still be somewhat accommodative and particularly notes that price increases in everyday medical services, childcare, dining, and accommodation cannot be fully attributed to tariffs, energy, or chip demand. The focus here is on a cumulative tightening of at least 50 basis points, as well as a potentially shortened interval between hikes, not on her explicit support for a single 50 basis point hike in December.

Fed officials remain divided on the speed of action. Philadelphia Fed President and 2026 FOMC voting member Anna Paulson supports further gradual tightening but firmly believes that long-term inflation expectations remain stable and wage pressures are limited; gradual adjustments can allow households, businesses, and banks to adapt to higher rates.

FOMC permanent voting member and Fed Vice Chair for Supervision Michael Bowman acknowledges more persistent inflation but emphasizes that falling stock prices, a stronger dollar, and widening corporate credit spreads have already tightened financial conditions; if AI investment returns fall short of expectations, market adjustments could further drag on consumption and investment. Their positions indicate that the direction of fighting inflation and the pace of rate hikes should be judged separately.

The market has already started to reprice the Fed’s rate hike path: On November 10, the probability of a 50 basis point December hike briefly neared 15%, before falling back to around 10%; rate futures traders have also increased bets on the Fed raising rates three more times (excluding the hike already implemented in September), each by 25 basis points by mid-2027, up from two times previously. From now through mid-2027, rate market expectations have shifted toward three more hikes of 25 basis points each, including a widely anticipated December 2026 increase, totaling another 75 basis points of tightening.

Deutsche Bank has also added a rate hike in January next year between its forecasted December and March hikes, expecting the target rate to rise to 4.50%-4.75%. Lindsay Rosner, a senior strategist at Goldman Sachs Asset Management, believes that stubborn inflation means further rate hikes in 2027 cannot be ruled out.

The path of Fed rate hikes is the more significant change for global risk asset prices—the prospect of tighter policy continuing longer than expected after the surprise October CPI release, not just a single hike in December.

For the recent notable rally in AI compute and the broader tech stock performance, this means earnings growth will need to offset a more persistent discount rate pressure; companies relying on external financing for expansion will also face funding costs jointly determined by benchmark rates and credit spreads. Whether the global tech stock rally can continue will depend more on order fulfillment, cash flow, and financing resilience.