October Core CPI Meets Waller’s Threshold to Consider a 50-Basis-Point Hike

Federal Reserve Gov. Christopher J. Waller’s inflation threshold for considering a larger December rate increase was met in October, when core CPI rose 0.3% for a third straight month.

The overall Consumer Price Index rose 0.4% in October, down from 0.6% in September. Core CPI increased 0.3%, matching its monthly gain in each of the prior two months.

On Nov. 10, Waller said an improvement in October CPI from September would still support a 25-basis-point increase at the Fed’s December meeting. He also said a stronger move may be needed if October CPI resembled the previous two monthly readings, with core CPI around 0.3% or higher, and that a 50-basis-point increase should be considered.

The October report showed both parts of that framework: an improvement in the overall CPI reading and core inflation at the level Waller cited. The data update Waller’s earlier case for a December rate increase and a possible larger move. The Fed’s next rate decision is in December.