U.S. inflation growth slows, allowing Fed to cut rate hikes

According to reports, the U.S. inflation rate in October was significantly lower than projected. Therefore, there is still a chance that prices will rise more slowly and that Federal Reserve officials will abandon sharp interest rate hikes.

The fact that inflation has decreased is evident. It’s proved by a relatively small increase in the core and the overall consumer price index. The growth of the core index was 0.3%, and the growth of the overall index was 0.4%, both increases are lower than the values​ predicted by economists.

Matthew Luzzetti, chief US economist at Deutsche Bank, looks positively on the current level of inflation. He believes that such a level could lead to a further decline. However, according to him, it’s too early to talk about concrete results. The economist shared his thoughts on Bloomberg Television.

Despite a clear downward trend in rates, the inflation rate hasn’t yet reached the level at which Fed officials would worry about the economy. Fed Chairman Jerome Powell, while not denying the trend, believes that some rates will still be raised and that the rate hikes will be higher than officials projected.

At the December Fed’s meeting, officials will be given the CPI report and the jobs report. On the one hand, there could be little growth in consumer prices next year, but on the other hand, some economists adhere to the idea that the Fed could face rising unemployment and a recession as it tries to meet its inflation target.