Commerzbank’s Dr. Christoph Balz highlights that persistent US inflation keeps pressure on the Federal Reserve to tighten further. The report cites comments from Fed Governor Christopher Waller advocating at least a 25-basis-point hike in December, with 50 basis points considered under certain conditions. Commerzbank continues to expect another 25-basis-point rate increase at the December FOMC meeting.

Market focus on December FOMC decision

“We continue to expect the Fed to raise interest rates at its next meeting in December.”

“In a speech this morning before the data were released, influential Fed Governor Christopher Waller had already called for a 25-basis-point rate hike at the Fed’s next meeting in December, even if the figures came in better than in September.”

“Waller said that if the monthly core reading was 0.3% (as now reported) or higher, a 50-basis-point hike should even be considered.”

“This signals the direction of the debate, although we do not expect such a drastic move to win majority support on the Federal Open Market Committee.”

“We continue to believe that September’s single rate hike is not enough to bring inflation down meaningfully, especially with the economy still humming and unemployment low.”