There could be a significant change in the economic landscape as indicated by the October CPI, suggesting a gradual decline in inflation.

According to the median economist consensus, the U.S. Consumer Price Index (CPI) inflation rate is expected to decrease from 3.7% in September to 3.3% in October, marking the first decline since June 2023. The Bureau of Labor Statistics will release the highly anticipated CPI report for October on Tuesday, which is being closely watched by investors and policymakers. While a decline in inflation is expected, there are still complex factors at play that could impact future interest rate adjustments. Federal Reserve Chair Jerome Powell has noted that returning inflation to the 2% target will take time, and the Fed’s economic projections suggest that the inflation rate will settle at 3.3% by the end of 2023 and decrease further to 2.5% by the end of 2024. Economists predict a significant decline in the headline CPI inflation rate for October, with a decrease from 3.7% to 3.3%, representing the first substantial slowdown in inflation since May 2023. The core CPI, which excludes food and energy, is expected to remain steady at a 4.1% year-on-year rate, indicating ongoing inflationary trends in these sectors. Bank of America economists forecast a monthly increase of 0.2% and an annual increase of 3.4% in the headline CPI, with a possible rise in core inflation to 0.3% or 0.4%, which could pose challenges for the Federal Reserve’s efforts to control inflation. If Bank of America’s projections come true, it could influence another rate hike in December. The release of the CPI report has led to minor downturns in major equity ETFs and a decrease in long-dated Treasury bonds, reflecting investor caution.