🔥Just now
The Federal Reserve suddenly announced that
On October 25, U.S. inflation in September fell below expectations across the board, which means that the Federal Reserve will likely implement its second interest rate cut of the year next week.
The data is as follows: U.S. September CPI year-on-year is 3%, core CPI year-on-year is 3%, both lower than expected by 0.1 percentage points. Now the Federal Reserve can rest easy—there is not much inflation pressure, and the focus of policy has shifted from inflation to employment.
Interestingly, the weakening of core inflation is mainly due to slow rent increases. Owners' equivalent rent only increased by 0.1%, which is much lower than expected. The impact of tariffs is also limited, with clothing rising by 0.7% and new cars by 0.2%, but this was offset by declines in used car and medical prices.
The Federal Reserve is now more worried about employment.
In August, new jobs increased by 22,000, far below expectations, and the unemployment rate rose to 4.3%, reaching a new high since November 2021. Powell has long stated that the labor market is cooling, and the data confirms this. This interest rate cut is "preventive," aimed at preventing employment from continuing to deteriorate.
The market reaction was very direct: U.S. stocks rose, the Nasdaq hit a historic high, and gold also increased. But don’t celebrate too early; the impact of tariffs may come "although late, but surely." A well-known securities analyst stated that the effective tariff rate in the U.S. could exceed 17%, and the inflation shock is still on its way.
The government shutdown has caused data delays; next month’s CPI may not be released, making it harder for the Federal Reserve to make decisions. However, for now, an interest rate cut is a high-probability event.
In simple terms, this interest rate cut by the Federal Reserve is "making preparations for a rainy day."