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Inflation isn't going away. Here's what that means for interest rates.
CBS News • • business
Key Points:
- Wall Street analysts increasingly expect the Federal Reserve to accelerate interest rate hikes, with forecasts of three consecutive 0.25 percentage-point increases in December, January, and March to combat persistent inflation.
- The Consumer Price Index for October showed a 0.4% rise in inflation, exceeding expectations and indicating broadening price pressures across the U.S. economy.
- Higher interest rates are anticipated to raise borrowing costs for consumers, with experts warning that a sustained higher federal funds rate will lead to increased long-term interest rates.
- Some Fed officials, including Governor Christopher Waller, have suggested that a more aggressive 0.50 percentage-point hike may be necessary to maintain the Fed's credibility and achieve the 2% inflation target.
- Elevated energy prices and strong corporate investment in technology, such as data centers for AI, are expected to keep inflation high through 2027, potentially reducing household purchasing power.
