September CPI: 2.6% Core Keeps the Fed on Higher-for-Longer

The September CPI print released October 14 was hotter than expected where it matters most to the Federal Reserve: core inflation came in at 2.6% year over year, two-tenths above the consensus, while headline rose to 3.7% from August's 3.4%. The Fed, already holding a target range of 3.75% to 4.00% after September's 25 basis point hike, now enters the October 27-28 FOMC with the higher-for-longer case firmly re-armed and markets pricing roughly a three-in-four chance it holds.

Key Takeaways Headline CPI-U rose 0.6% month over month and 3.7% year over year in September, beating the 3.6% consensus, with core at 2.6% year over year, two-tenths above forecasts. Energy is the engine: gasoline jump…