Preview of CPI: Is escaping inflation difficult? The US October CPI is scheduled to be announced on Wednesday night.

The service sector, which rose by 4.8% in the year up to September, is the most delayed area in terms of core inflation decline. Service prices excluding food and energy remained almost unchanged from the previous month's 0.36% increase, with a 0.34% increase expected by the market.

For major housing expenses, a growth of 0.3% similar to September is expected, leading to a slight decrease in the 12-month change rate to 5.0%. It is also believed that increased evacuations and movements due to hurricanes have pushed up lodging demand outside the home and raised travel-related prices.

On the other hand, monthly increases in automobile insurance, tuition, and medical expenses are expected to remain small, leading to an easing of other core service prices. Service providers continue to benefit from stabilizing product costs and deceleration in labor costs.

While the return to price stability is still halfway there, factors such as cooling in the labor market, normalization of supply chains, improvement in productivity, and stabilization of inflation expectations are believed to help gradually bring inflation back to the Fed's target level over the next two years.

On the other hand, there are several remaining risks of increase in the short to medium term. Specifically, factors such as reduction in labor supply, the impact of deglobalization on import prices, escalation of conflicts in the Middle East, and persistent strong demand are mentioned.

Many of the policies proposed by President-elect Donald Trump during the election campaign are believed to intensify these pressures and potentially delay the return to the Fed's target. There is a possibility that this could lead to a resumption of price acceleration over the next year or so.

Trump tariff policy may push up inflation = FRB official. On November 10, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, mentioned the proposal to impose a flat-rate tariff on imports from all countries as a core economic policy in Trump's reelection campaign. He pointed out that if this policy led to retaliation from other countries and retaliatory measures were taken against the United States, it could accelerate long-term inflation.
On November 10, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, mentioned the proposal to impose a flat-rate tariff on imports from all countries as a core economic policy in Trump's reelection campaign. He pointed out that if this policy led to retaliation from other countries and retaliatory measures were taken against the United States, it could accelerate long-term inflation.

While Mr. Kashkari appeared on CBS's 'Face the Nation' and stated that isolated tariff measures 'will not affect long-term inflation,' he emphasized that 'the problem arises if retaliatory escalation occurs. If a country introduces tariffs and the situation continues where other countries take countermeasures in response, the situation becomes a cause for serious concern and becomes extremely uncertain.'

On November 7th, the Federal Reserve Board (FRB) implemented another rate cut, but as the inflation rate approaches the 2% target, Mr. Kashkari stated that an additional rate cut is expected in December. However, he indicated that it is 'dependent on the data at that time.'

Regarding other policies proposed by President Trump, such as large-scale deportations of immigrants, Mr. Kashkari stated that at the current time, inflation risks are not clear. The FRB continues to maintain a 'wait-and-see' approach and has stated a policy of not making any changes.

Rate cut expectations fade with Trump's victory, and the market focuses on the US Consumer Price Index (CPI).
Donald Trump's historic return to the White House was met with ecstatic market reactions. Wall Street and Bitcoin hit all-time highs, while the US dollar surged to its highest level in four months. However, perhaps the most significant move was the sharp rise in bond yields.

Investors had reduced their bets on the number of rate cuts the Federal Reserve Board (FRB) would make over the next 2 to 3 years, resulting in an upward trend in yields since late September. However, President Trump's victory dealt a further blow to expectations of low interest rates.

If President Trump's election promises of tax cuts and tariff hikes are implemented, it is expected that inflation will be pushed up through the expansion of domestic demand and the increase in import costs. In this case, the Federal Reserve Board (FRB) is expected to be forced to maintain a more restrictive monetary policy over a longer period than currently anticipated.

The Consumer Price Index (CPI) for October to be announced on Wednesday is the first important indicator testing the expectations of rate cuts against the background of the post-election "Trump Trade" market reappraisal. The September CPI comprehensive index decreased by 2.4% year-on-year, but it is expected to slightly increase to 2.6% in October. It is predicted to remain unchanged from the previous month at 0.2%.

If the CPI results fall below expectations, there is a possibility that yields and the dollar exchange rate, which have recently risen sharply, will be adjusted. On the other hand, if the data shows strength exceeding expectations, there is a high possibility of a further continuation of the strong dollar trend. However, such a situation could pose a challenge to Wall Street. The rise in yields is expected to eventually put pressure on Wall Street traders.

On Thursday, the announcement of the October Producer Price Index (PPI) in the USA is scheduled, and attention will also be focused on the announcement of US retail sales revenue on Friday.