Tracking inflation without CPI: Here's what to know

Core Viewpoint - The Federal Reserve is currently facing uncertainty regarding potential interest rate cuts, with a divided stance among its officials and a lack of critical economic data influencing their decisions [4][8][11]. Group 1: Inflation Data and Analysis - The White House indicated that the Consumer Price Index (CPI) and jobs data for October may not be released, leading the Fed to consider alternative inflation data, such as State Street's price statistics, which have shown a gradual increase since May [2][3]. - The alternative data has been stable over the past two months but does not account for services, which is a significant gap in understanding overall inflation trends [3]. Group 2: Federal Reserve Officials' Positions - Atlanta Fed President Raphael Bostic expressed opposition to a December rate cut, citing business survey data indicating intentions to raise prices, and noted inflation's spread into core services [4]. - A growing number of voting members at the FOMC are either against or cautious about a December rate cut, with six out of twelve members showing this divided sentiment [11]. Group 3: Market Reactions and Probabilities - Prior to recent comments from Fed officials, the market had a 64% probability of a December rate cut, which has since dropped to a 50% chance, while a 69% probability remains for a cut by January [7]. - The market's reaction reflects the uncertainty and differing opinions among Fed officials regarding the importance of various economic data points [9][12]. Group 4: Economic Conditions and Future Outlook - There is a belief among some Fed officials that the economy is performing well, with the stock market acting as a tailwind, complicating the decision-making process regarding rate cuts [15]. - A definitive weak jobs report is seen as necessary to sway cautious officials towards supporting a rate cut, highlighting the importance of employment data in the Fed's considerations [15].