October CPI Rises More Than Forecast, Putting Fed Rate Outlook in Focus

U.S. inflation remained stronger than anticipated in October, increasing the likelihood of another Federal Reserve rate hike next month. Fed Governor Chris Waller has indicated that the central bank could even consider a 50-basis-point increase if incoming inflation data continues to show persistent price pressures.

Although headline inflation slowed compared with September, the latest CPI figures exceeded market forecasts and remained above the Fed’s 2% target. The report has added uncertainty to the monetary policy outlook ahead of the central bank’s final meeting of 2026.

The Consumer Price Index (CPI) climbed 0.4% in October, down from September’s 0.6% increase but above the 0.3% rise expected by economists.

Core CPI, which excludes food and energy prices, increased 0.3%, matching the previous month’s reading. However, the figure was higher than the 0.2% gain anticipated by analysts.

The Bureau of Labor Statistics (BLS) did not release the year-over-year CPI figure because the October 2025 report was unavailable due to the government shutdown that took place at the time.

Bitcoin came under renewed selling pressure after the inflation figures emerged, falling approximately 1% to $73,600. U.S. equity futures also moved lower, with Nasdaq 100 futures declining 1.15% and S&P 500 futures slipping 0.5%.

Bond markets had started pricing in tighter monetary conditions even before the inflation report. Treasury yields moved higher after Fed Governor Chris Waller suggested that another rate increase could be appropriate in December, regardless of whether the CPI figures showed some improvement. He also indicated that policymakers might consider a 50-basis-point move if inflation proved particularly strong.

Following the release, the 10-year U.S. Treasury yield advanced 6.5 basis points to 4.93%. The two-year yield climbed 14 basis points to 4.69%, as investors increased their expectations for a potentially larger rate adjustment at the Federal Reserve’s December meeting.