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Lower Inflation Expected in October CPI Report

The October Consumer Price Index (CPI) report is due to be released on Tuesday, with investors expecting it to play a major role in influencing the Federal Reserve’s next interest rate decision in December.

Markets are expecting the CPI report to show a headline inflation of 3.3% on an annual basis, down from September’s 3.7%. On a monthly basis, prices are expected to have increased by 0.1%, slower than September’s 0.4% rise. Core inflation, which excludes volatile food and gas costs, is expected to have increased by 4.1% over the last year, while on a monthly basis, a 0.3% increase is expected.

Although inflation shows continued signs of cooling, the Federal Reserve is not expected to lower rates. “Subdued increase in October’s headline CPI is likely to be overshadowed by another firm reading in the core,” Wells Fargo observed in a note. Although inflation remains above the Fed’s 2% target, an interest rate hike in December is also not expected.

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