US Inflation Accelerates in September, Boosting Expectations of Another Fed Rate Hike This Year

Daily News

Summary:

US inflation accelerated in September as gasoline prices surged. San Francisco Fed President Mary Daly said a rate hike may be necessary, but it is not imminent.

【Headlines】

1. Russia: First Contracts for Diesel Supplies to the US Expected to Be Signed in the Coming Days

2. Two Singapore-Flagged Vessels Attacked in the Strait of Hormuz

3. Israeli Defense Minister Threatens to Expand Occupation in Southern Lebanon

4. Timiraos: The Case for Another Fed Rate Hike This Year Is Strengthening

5. US Inflation Accelerates in September as Gasoline Prices Surge, Raising Odds of an October Fed Rate Hike

6. US Gasoline Prices Are One-Third Higher Than a Year Ago

7. Daly: A Rate Hike May Be Necessary, but It Is Not Imminent

8. Goolsbee: September Inflation Was Disappointing, but More Data Are Needed Before a Rate Hike

9. Beige Book: Half of Fed Districts Reported Strong or Intensifying Price Pressures

【Detail】

Russia: First Contracts for Diesel Supplies to the US Expected to Be Signed in the Coming Days

Kirill Dmitriev, a special representative of the Russian president, said on October 14 that Russia and the United States were expected to sign their first contracts for diesel supplies to the US in the coming days.

Dmitriev made the remarks while attending an event associated with Russian Energy Week. Asked when the first contracts would be signed and deliveries would begin, he said everything would happen within the next few days.

Dmitriev added that Russia was maintaining active communication with the US and discussing how to implement the supplies as quickly as possible, including resolving logistical issues.

Two Singapore-Flagged Vessels Attacked in the Strait of Hormuz

Singapore's Maritime and Port Authority said in a statement on the evening of October 14 that two Singapore-registered container ships had reportedly been struck by unidentified projectiles while transiting the Strait of Hormuz, with one vessel catching fire and subsequently sinking.

According to the statement, one vessel was damaged in an attack on October 13, caught fire, and later sank. All 21 crew members were safely evacuated.

The second vessel sustained hull damage following an attack on October 14 but managed to reach a safe anchorage under its own power. All 22 crew members were safe.

Israeli Defense Minister Threatens to Expand Occupation in Southern Lebanon

Israeli Defense Minister Israel Katz warned on October 14 that Israeli forces would expand their occupation of southern Lebanon if Hezbollah joined Iran in attacking Israel.

During a visit to a buffer zone established by Israeli forces in southern Lebanon, Katz said Hezbollah would suffer a heavy blow and lose additional territory in southern Lebanon if it coordinated attacks on Israel with Iran. He said parts of the Nabatieh area and the region around the Litani River would be incorporated into Israel's permanent security zone.

Katz added that Israeli forces were prepared to launch a ground offensive. The military would also demand that residents leave Hezbollah strongholds in Beirut's southern suburbs and target Hezbollah infrastructure in the area.

He warned that more than one million Shiite residents in Lebanon could be displaced as a result.

Timiraos: The Case for Another Fed Rate Hike This Year Is Strengthening

Nick Timiraos, often described as the Federal Reserve's unofficial mouthpiece, said on Wednesday that underlying inflation had exceeded expectations for a second consecutive month in September, further strengthening the case for another Fed rate hike this year.

Last month, Fed officials unanimously voted to raise interest rates, and nearly all of them expected another increase before the end of the year.

The core Consumer Price Index (CPI), which excludes food and energy prices, rose approximately 0.33% month over month in September, exceeding all forecasts. Core CPI had increased by approximately 0.29% in August.

The report presents Fed officials with two key questions. The more immediate one is whether they can still wait until December to raise rates again, after officials recently indicated that they did not expect to adjust policy at the meeting scheduled in two weeks.

Some analysts argue that if policymakers believe a rate hike will ultimately be necessary, there may be little reason to keep waiting. However, Fed officials have not yet shown signs of reconsidering their policy plans based on a single report.

The more important question is how high interest rates will ultimately need to rise. That will depend on whether pressure from higher energy prices and the AI investment boom spreads further throughout the broader economy.

Market attention is increasingly focused on the timing of a potential rate hike and the eventual peak in interest rates. In the near term, investors will be watching for any shift in the Fed's communications and further evidence that inflationary pressures are broadening.

US Inflation Accelerates in September as Gasoline Prices Surge, Raising Odds of an October Fed Rate Hike

US CPI rose 0.6% month over month in September, up from 0.4% in August and in line with expectations, according to data released on Thursday. Annual inflation stood at 3.7%.

The acceleration was driven primarily by a surge in gasoline prices. The data suggest that price pressures are spreading beyond the energy sector into broader areas of the economy.

The figures also pose a renewed challenge for President Donald Trump and his Republican Party ahead of the November 3 midterm elections, while bringing the possibility of a Fed rate hike later in October back into market focus.

According to CME Group's FedWatch Tool, financial markets raised the probability of a rate hike at the Fed's October meeting to approximately 37%, up from around 22% before the CPI report was released.

US Gasoline Prices Are One-Third Higher Than a Year Ago

US energy prices rose 5.2% in September from the previous month and were up 20.4% from a year earlier, according to reports.

Consumers have felt the sharpest increases at the pump, with gasoline prices approximately 34% higher than a year ago.

According to the American Automobile Association (AAA), the average price of regular gasoline stood at $4.33 per gallon on Wednesday. That was slightly higher than a month earlier and more than 40% above the level recorded a year ago.

Diesel prices remained near record highs. The average price reached $6.30 per gallon on Wednesday, up 72% from a year earlier.

Soaring fuel costs also pushed up airfares, which rose 1.2% in September and were 22.4% higher than a year earlier.

Daly: A Rate Hike May Be Necessary, but It Is Not Imminent

San Francisco Fed President Mary Daly said in a speech on Wednesday that the Federal Reserve might need to raise short-term interest rates further to bring excessively high inflation under control.

However, she stressed that the timing remained under consideration. There was no need to act at the October meeting or rush into a decision with limited information, she said, adding that policymakers had sufficient time to assess the situation.

Goolsbee: September Inflation Was Disappointing, but More Data Are Needed Before a Rate Hike

Chicago Fed President Austan Goolsbee said in a speech on Wednesday that September's higher-than-expected inflation data were disappointing. Services inflation remained above 5%, while core goods prices had not eased as much as expected, suggesting that inflationary pressures could prove more persistent than previously thought.

If core inflation continues at an annualized pace of approximately 4% based on monthly readings, that would be entirely unacceptable, and the Fed would have to take policy action, he said.

The latest data further suggest that inflation is not merely a temporary phenomenon and is declining more slowly than previously expected. The US labor market remains very stable, economic growth is strong, and consumer spending is robust. AI investment could also push the economy toward further overheating.

Businesses across Goolsbee's district have reported few concerns about recession risks. Instead, they have broadly highlighted rising costs and prices. This suggests that demand-driven overheating may be a greater concern than supply shocks.

If employment remains stable while inflation stays above target and moves in the wrong direction, the Fed will need to take action to prevent the economy from overheating further, he said.

Beige Book: Half of Fed Districts Reported Strong or Intensifying Price Pressures

The Federal Reserve's latest Beige Book indicated that half of the Fed's districts were experiencing strong or intensifying price pressures.

Tariffs were creating widespread cost pressures, and some businesses had begun passing those costs on to customers. Prices were expected to remain elevated.

The Beige Book noted that three districts described overall price increases as strong, while eight reported moderate increases. Among those eight, three districts said input-cost pressures were intensifying or had already risen sharply.

Since the previous Beige Book, two of the Fed's 12 districts reported moderate growth in economic activity, three recorded slight growth, four described activity as edging higher, and the remaining three reported little or no change.

The overall outlook was cautiously optimistic, although businesses remained concerned about weak demand and the inflationary effects of tariffs.

Consumer spending was increasingly polarized: higher-income households continued to spend strongly, while lower- and middle-income households cut back on nonessential purchases. Manufacturing activity was mixed, and the housing market weakened. Reports from other industries pointed to little overall growth.

Employment levels were broadly unchanged. Most districts described little net change in overall hiring, with businesses mainly recruiting to fill vacancies. Skilled-worker shortages persisted, wage growth returned to more normal levels, and AI had not yet had a noticeable impact on employment.

Today's Economic Calendar

10:55 (UTC+8) Remarks by Fed Governor Michelle Bowman

11:35 (UTC+8) Remarks by ECB Governing Council members Martin Kocher and Gediminas Šimkus

11:40 (UTC+8) Remarks by Bank of England Chief Economist Huw Pill

12:30 (UTC+8) Remarks by ECB Governing Council member Mārtiņš Mūlans and Swiss National Bank President Martin Schlegel

14:00 (UTC+8) UK GDP, three-month growth rate, for August

14:45 (UTC+8) Remarks by Bank of England Monetary Policy Committee member Megan Greene

16:45 (UTC+8) Remarks by Bank of England Deputy Governor Sarah Breeden

17:00 (UTC+8) Eurozone industrial production, month over month, for August

18:00 (UTC+8) Remarks by Bank of England Governor Andrew Bailey

20:30 (UTC+8) US retail sales, month over month, for September

20:30 (UTC+8) US Producer Price Index (PPI), year over year, for September

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

Analysis

User

24/7

Economic Calendar

Education

Data