Reaction roundup: Experts, analysts weigh in on October CPI report

Wall Street’s focus on Tuesday was on the October U.S. consumer inflation report which came in hotter-than-expected. The data, combined with hawkish comments from Federal Reserve Governor Christopher Waller, led to traders all but locking in an expected quarter-point rate hike in December and even considering a supersized half-point increase.

As per the U.S. Bureau of Labor Statistics, headline CPI ticked up 0.4% M/M in October after a 0.6% rise in September. Economists had expected an increase of 0.3%. Core CPI, which strips out volatile food and energy prices, remained steady at 0.3% M/M, coming in higher than the anticipated 0.2% figure.

There were no Y/Y figures published in the CPI data on account of a U.S. government shutdown in October 2025.

The CPI also comes just days after a blockbuster nonfarm payrolls report. The combination of a strong labor market and persistent inflation sets the stage for monetary policy tightening, with the question now being just how big the rate hike will be next month.

While a 25 basis point increase is widely anticipated, the probability of the Federal Open Market Committee (FOMC) delivering a 50 basis point rate hike has ticked up to nearly 11% from no odds before the CPI data, according to the CME FedWatch tool.

Waller earlier at an event in London said he would support a 25bps rate hike in December even if October inflation improves, and that a larger 50 bps move should be considered if price pressures stay strong.

Focus will now turn to the producer price index (PPI) later this week, followed by the latest reading on the Fed’s preferred inflation gauge - the personal consumption expenditures (PCE) price index later this month.

Wall Street opened lower after the CPI and Waller’s remarks, with the benchmark S&P 500 last down 0.7%. Interest-rate sensitive assets saw big reactions, with U.S. Treasury yields soaring as bonds were dumped and the dollar strengthening. The 2-year yield jumped 20.1 basis points to 4.748%, while the U.S. dollar index advanced 0.7%.

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See below for various reactions to the CPI data:

Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research:

“October CPI disappointed at both the headline and core levels, with clear impacts showing up from the increase in fuel prices.

Governor Chris Waller’s speech before the inflation report now reads quite timely, given his mention of core CPI increasing by 0.3% M/M (which did in fact happen in October) as a clear sign to—at the very least—hike in December and—in a more aggressive scenario—consider a 50bps rate hike at the next meeting.

While it’s likely early days for a 50bps rate hike discussion, the point is that inflation data are trending in the wrong direction as the labor market continues to strengthen by several metrics (most notably, the significant beat for October payrolls). We will wait for PCE signals that come from PPI later this week, but at this point, the data are stacking in favor of a coming hike.”

Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics:

“There's no silver lining to this U.S. CPI report…Following Waller's speech, a 50bp hike will now clearly be under consideration in December, though (for what it's worth) I think most FOMC members will stick to a more gradual approach.”

Justin Wolfers, professor of public policy and economics at the University of Michigan:

“Ugh. Latest inflation numbers just came out, and it's still running hot, and hotter than most expected. One hopes inflation starts returning to normal, but that's a hope right now, not a reality.

Today's numbers are CPI inflation. The Fed targets PCE inflation. And core PCE inflation is actually running a bit hotter than core CPI.”

Chris Zaccarelli, chief investment officer at Northlight Asset Management:

“Given the higher-than-desired inflation, it is even more likely now that the Fed will raise rates in December and although some are calling for a 0.5% increase in the Fed Funds target rate, we expect that they will only raise rates by 0.25% next month.

However, the new question is whether or not the Fed will follow that up immediately with a second 0.25% rate hike in January – which would have been unexpected before today – or whether they will take their time and raise rates for slowly next year (e.g. skip one or two meetings between rate hikes in 2027).

All of this matters for markets, because a more patient Fed would be easier for stock bulls to navigate, while a more aggressive Fed could prove to be too big of a headwind for the market to overcome next year.”

Robin Brooks, senior fellow in economic studies at the Brookings Institution:

“All the details of this CPI report are discouraging, but October was also the peak of the second big oil price shock this year and that's obviously going to bleed into core CPI inflation. So today's CPI reading is more backward-looking than normal.”

Jeffrey Roach, chief economist at LPL Financial:

“Not all current inflation pressures should be attributed to the war in the Middle East, although some are likely the result of supply constraints. Rather, part of today’s inflation is demand-driven. The Fed will take this into account and will likely raise rates in December to cool the demand side of inflation. One encouraging sign is that rent inflation has remained between 2.7% and 2.9% for the past 10 months.”

Peter Schiff, chief economist and global strategist at Euro Pacific Asset Management:

“The CPI will likely rise 5% in 2026 and by more than 7% in 2027, higher than any calendar year under Biden. The Fed's planned rate hikes are too little, too late to prevent this. The federal funds rate must be raised by at least 200 basis points now to possibly stop this train.”