Inflation On Track, But Fed May 'Go Slowly' On Interest Rate Cuts, Experts Say

October's Consumer Price Index rose from 2.4% in September to 2.6% in October, in line with economist predictions. Here's a look at what experts expect from the Federal Reserve in the months ahead. 

Experts Weigh In: Minneapolis Fed President Neel Kaskari appeared on Bloomberg TV following the CPI data release and said that he has been surprised at the resilience of the U.S. economy in the face of high interest rates. However, he noted that the labor market has been softening. 

"I have confidence that inflation is headed in the right direction. Is it headed there fast enough? Do we want it to get there more quickly? We will see," Kashkari said. 

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Kashkari cautioned on Tuesday that the Federal Reserve could hold off on an interest rate cut in December if inflation data comes in hotter than expected between now and then. 

Tiffany Wilding, economist from Pimco, appeared on CNBC's Squawk Box and noted that a December rate cut is "still an open question" following the first increase in the annual inflation rate in six months.   

“You could get a Fed that just decides to skip and go slowly,” Wilding said. 

Joe Brusuelas, chief economist at RSM, noted that the primary catalysts for October’s higher figure were a 2.7% increase in the cost of used auto, a 3.2% increase airline fares and sustained stickiness in housing and service inflation. He sees the Fed moving forward with a 25 basis point cut in December, which would take the rate to a range between 4.25% and 4.5%. 

However, Brusuelas cautioned that his previous forecast for four 25-point cuts, one at each meeting in 2025, may be in jeopardy. The Fed may need to pause at some point next year due to the "arrival of expansionary fiscal policy in 2025," he said. 

"Elections have consequences and the immediate consensus is that the economy, which is already strong, may accelerate amidst higher import taxes and inflation," Brusuelas wrote. 

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Image created using artificial intelligence via Midjourney.