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Fed Expected To Ease Before Inflation Reaches Target–Market Talk

Inflation remains above target, but it is slowing and fueling bets on easing monetary policy ahead. The CME’s FedWatch tool prices 95% odds of the Fed holding rates at the current 5.25%-5.5% range in December, up from 86% yesterday. A 25-basis point cut becomes the highest probability in May. October core annual CPI was 4%, slowing slightly from September’s 4.1%, while the Fed targets 2%.

AmeriVet’s Gregory Faranello says in a note that “the Fed is not going to get the golden egg for touching down exactly at 2%. They will be easing long before.”

By: Paulo Trevisani