For a welcome change, U.S. consumer prices rose less than expected in October, sparking a relief rally in financial markets. The report reinforced a view that inflation has peaked, thanks to softer goods prices. Still, we see a slow decline amid sticky services prices and potentially stubborn pressure from food and energy costs.
Read the latest report from BMO Economics to see why we remain well above consensus in calling for CPI inflation to fall only slowly and to still hover in the high 3% range in late 2023, but don’t think it means a forward-looking Fed will need to keep hiking rates through next year.