US inflation rose to 2.6 per cent in October, as the Federal Reserve debates how quickly to lower interest rates.
Wednesday’s figure from the Bureau of Labor Statistics was in line with economists’ expectations of a 2.6 per cent rise and above September’s 2.4 per cent pace.
Once volatile food and energy prices were stripped out, “core” CPI held steady at 3.3 per cent on an annual basis.
The inflation data will be closely watched by the US central bank, which has already lowered its benchmark rate by 0.75 percentage points over two successive meetings to a new target range of 4.5-4.75 per cent.
Treasury yields fell following the data release as investors bet that the Fed is now more likely to cut interest rates next month. Futures markets imply a roughly 75 per cent probability of a quarter-point cut in December, up from 60 per cent before the inflation figures.