Fed October Decision: CPI Reaccelerated to 3.7% as Payrolls Cool

September headline inflation re-accelerated to 3.7% year over year , up from 3.4% in August and the second straight acceleration, and it did so almost entirely on energy even as the labor market softened. That is the definition of a policy bind, and it lands squarely on a Federal Reserve sitting in a communications blackout ahead of its October 28 decision with the effective fed funds rate at 3.88%.

Key Takeaways September CPI rose 3.7% y/y, up from 3.4%, on gasoline that is 34.2% higher than a year ago, while core inflation ticked up to 2.6%. Nonfarm payrolls added just 29,000 jobs in September, well under the roughly 84,000 consensus, and the unemployment rate rose to 4.2%. The Fed sits in…