US inflation rises to 3% in September — paving way for fed to cut rates next week

Core Insights - US inflation increased to 3% in September, slightly below the expected 3.1%, indicating potential for Federal Reserve rate cuts [1][2][5] - The Consumer Price Index (CPI) rose 0.3% month-over-month, marking the fastest annual rate since the beginning of the year [2][4] - Core inflation, excluding food and energy, also rose to 3%, down from 3.1% the previous month, contrary to expectations of remaining flat [4][5] Economic Context - The CPI report was delayed due to the federal government shutdown, which is now the second-longest in history [5] - There are concerns regarding the accuracy of the inflation report due to the ongoing government shutdown [7] - The Federal Reserve is expected to cut interest rates at its upcoming policy meeting, following a quarter-point cut last month [7][9] Market Reactions - Wall Street showed a positive response, with the Dow Jones Industrial Average rising by 66 points, or 0.1%, in premarket trading [6] - Analysts suggest that if unemployment data weakens significantly, a 50 basis point cut could be anticipated in December [6] Federal Reserve Dynamics - There is internal dissent among Federal Reserve officials regarding the pace of rate cuts, with some advocating for a half-point cut while others prefer a quarter-point cut [8] - Economists are monitoring the impact of tariffs on prices as part of the broader inflation discussion [8]