At the start of the year, the Federal Reserve was sanguine about the American economy. Inflation seemed to be trending down. The shock from President Donald Trump's tariffs was abating. Economists projected the central bank could lower rates.
Instead, the central bank was forced to raise rates in September for the first time since 2023, hiking 25 basis points as inflation, which has run above the Fed's 2% target for more than five years, reemerged as its bugbear.
As the Federal Open Market Committee's final meeting looms on Dec. 8, October's inflation reading was higher than expected: 0.4% month-on-month versus the 0.3% predicted in a Dow Jones survey of economists. So-called core CPI increased 0.3% against a 0.2% forecast.
Almost 88% of traders expect another 25-basis-point hike next month, according to the CME Fedwatch tool.
The cost of living has been a top issue on Americans' minds. Vice President JD Vance cited it as a reason the Republican Party lost so much ground in the midterm elections.