The Zhitong Finance App learned that the US core CPI inflation data for October once again exceeded the market's unanimous expectations, and the patience of Federal Reserve officials that “the pressure to increase prices will subside by itself” seems to be weakening. In an interview on November 10, 2027 FOMC voting committee and Chicago Federal Reserve Chairman Austin Goulsby described the latest inflation report as “disturbing; it can almost be said that overheated inflation is very unsettling.” What he is most worried about is that tariffs and energy shocks have been slow to fully subside, and service inflation continues to be high.
However, he did not clearly support the 50 basis point rate hike in December, but instead emphasized that no policy options could be ruled out ahead of time. Goulsby did not have the right to vote in 2026 and will vote on a rotational basis in 2027. Specifically, the overall US CPI rose 0.4% month-on-month in October. Although it was lower than 0.6% in September, it still exceeded market expectations of 0.3%; core CPI rose 0.3% month-on-month, maintaining this growth rate for the third month in a row, and also higher than the 0.2% forecast.
Although the latest inflation price shows — the increase in energy prices surrounding petroleum product lines such as automobiles and diesel narrowed from 5.2% to 0.7%, the prices of food, housing, and medical care continued to rise, and the price of transportation services increased by 0.8%. The key point of this set of data is that energy price increases driven by oil prices are slowing down, have yet to bring about further improvements in core inflation, and the level of prices borne by consumers is still rising.
Waiting for the supply shock to subside will resolve inflation depends on whether price increases are still concentrated in a few affected industries. Once price pressure spreads to a wider range of services and gradually affects corporate pricing and wage negotiations, falling oil prices alone will make it difficult to restore price stability. Meanwhile, 165,000 new non-farm payrolls were added in October, and the unemployment rate fell to 4.1%, reducing the urgency for officials to respond immediately to the decline in employment and giving higher priority to controlling inflation.
Federal Reserve Goulsby says October CPI report is “disturbing”
Chicago Federal Reserve Chairman Austin Goulsby said in an interview that officials must deal with high inflation, adding that the October consumer price report was disturbing.
“This is another worrying report. It can almost be said that overheated inflation is very disturbing,” Goulsby said in an interview with the US Public Broadcasting Corporation's “News Hour” program on Tuesday. “We're always looking forward to seeing progress.”
Goulsby said that he originally anticipated that several factors driving up prices, including tariffs and high energy prices, should have subsided by now. He added that service inflation has remained high, and said it was “probably the most worrying part.”
Core consumer prices, excluding food and energy costs, rose 0.3% month-on-month in October, exceeding expectations for the third month in a row, according to data released by the US Bureau of Labor Statistics earlier on Tuesday. Federal Reserve Governor Christopher Waller warned in another speech in London on Tuesday before the report was released that if inflation does not improve, officials may need to raise interest rates by 0.5 percentage points at the December meeting.
When asked how he sees the possibility of a more drastic rate hike, Goulsby said he doesn't like to restrict the hands and feet of officials before policy meetings.
“I have to say that the table in that room is really the biggest table I've ever seen in my life. So, all options are always on the table,” said Goulsby, who did not vote on interest rate decisions this year. “We have to get inflation back to the target, and now it's moving in the wrong direction.”
Waller opens the 50 basis point option, and the market begins to reassess the 2027 interest rate path
FOMC Standing Committee Member and Federal Reserve Governor Christopher Waller proposed a clear threshold in his November 10 London speech: even if inflation improves in October, he still favors raising interest rates by 25 basis points in December; if the core CPI is about 0.3% or higher month-on-month, then a 50 basis point increase should be considered. The speech took place before the data was released, and subsequent readings hit this condition. He feared that in the face of continued and diffuse upward pressure on prices, insufficient action would damage the Federal Reserve's credibility in fighting inflation.
As a result, the option for the Federal Reserve to raise interest rates by 50 basis points in December has become an interest rate futures market discussion option based on specific data, but it has not yet become an official interest rate decision by the Federal Reserve's FOMC Committee.
The 2026 FOMC voting committee and Dallas Federal Reserve Chairman Lori Logan said on the same day that interest rate hikes of 25 basis points each time will be needed at least twice, and the pace of action in winter may be faster than in the fall. She believes that the current policy is still too relaxed, and specifically pointed out that price increases for services such as daily medical care services, childcare, catering, and lodging cannot be fully attributed to tariffs, energy, or chip demand. The point here is to accumulate at least 50 basis points and possibly shorten the interval between interest rate hikes. It is not that she has clearly supported a 50 basis point increase in interest rates in December.
Federal Reserve officials are still divided over the pace of action. In 2026, FOMC and Philadelphia Federal Reserve Chairman Anna Paulson supports further gradual tightening, but she firmly believes that long-term inflation expectations are still stable, wage pressure is limited, and that gradual adjustments can allow households, businesses, and banks to adapt to higher interest rates.
Michelle Bauman, the FOMC Standing Committee and the Federal Reserve's vice chairman in charge of regulatory affairs, acknowledged that inflation has lasted longer, but emphasized that falling stock prices, a stronger dollar, and widening corporate financing spreads have tightened financial conditions; if the return on AI investment falls short of expectations, financial market adjustments may also drag down consumption and investment. The positions of the two show that the direction of fighting inflation and the speed of interest rate hikes need to be judged separately.
The market, on the other hand, has already begun to reprice the Federal Reserve's interest rate hike path: on November 10, the probability of raising interest rates by 50 basis points in December was once close to 15%, then fell back to about 10%; interest rate futures market traders also increased their bets for the Federal Reserve's cumulative three rate hikes up to mid-2027 (not including interest rate hikes already implemented in September) of 25 basis points each time, up from the previous two. From now until mid-2027, interest rate market expectations have shifted to three more interest rate hikes of 25 basis points each time, including the anticipated rate hike in December 2026, for a total tightening of 75 basis points.
Deutsche Bank also added another rate hike in January next year between the original forecast for December and next March. The target interest rate is expected to rise to 4.50% to 4.75%. Lindsay Rosner, a senior strategist in Goldman Sachs's asset management department, believes that stubborn inflation means further interest rate hikes cannot be ruled out in 2027.
The more important change in the Federal Reserve's interest rate hike policy path for global risk asset prices is that the austerity may have continued longer than before the October CPI was announced, which exceeded expectations, not just the extent of a single rate hike in December.
For AI computing power and broad technology stock trends, which have rebounded significantly recently, this means that profit growth needs to offset longer-term discount rate pressure; companies that rely on external financing to expand also face financing costs determined by a combination of benchmark interest rates and credit spreads. Whether the rebound in global technology stocks can continue will depend more on order fulfillment, cash flow, and financing affordability.