The US Bureau of Labor Statistics announced on Thursday that the US CPI in September rose by 2.4% year-on-year, slightly lower than the previous value of 2.5%, but higher than the expected value of 2.3%; the core CPI in September (excluding volatile food and energy costs) rose by 3.3% year-on-year, slightly exceeding the expected and previous value of 3.2%. Most Wall Street analysts believe that the September CPI data is mixed, although it reinforced the expectation that the Federal Reserve will slow down the pace of interest rate cuts, ruling out a significant 50 basis point rate cut, but it will not change the Fed's judgment that inflation is still in a declining trend.

Leo He from the UBS Securities trading team:

"In September, the overall and core CPI in the US increased by 18 basis points and 31 basis points respectively compared to the previous month, higher than the market's expected monthly growth of 0.1% and 0.2%. Details show that owners' equivalent rent slowed from 50 basis points last month to 33 basis points, but medical services increased from -9 basis points to 66 basis points, used car prices rose by 0.3% month-on-month, compared to -1% previously. The super core rose to 40 basis points, the highest since April."

Ali Jaffery from CIBC Capital Markets:

"Today's data will strengthen the expectation that the Federal Reserve is not in a hurry to take action. The labor market is slowing down, but not collapsing, and inflation remains slightly above target."

Karl Schamotta, Chief Market Strategist at Corpay:

"Investors may have been overly optimistic about a significant rate cut after the September meeting, but in the coming months, a gradual easing of interest rates is still the most likely outcome."

Bloomberg's Chief Economist Anna Wong:

"The September CPI report contains both good and bad news about inflation. The good news is that progress towards deflation in rents may finally be accelerating. The bad news is that inflation remains high in some key service categories, such as auto repairs and insurance. Deflation in core commodity prices has stalled. However, even so, the favored price indicator by the Fed - the core PCE price index (to be released on October 31) may still rise slower than the CPI, as seen over the past few months."

Overall, despite the core CPI exceeding expectations, we do not believe this report will change the Federal Open Market Committee's (FOMC) view that inflation is on a downward trend. We expect the FOMC to cut interest rates by 25 basis points at the meeting on November 6-7."

Bloomberg's Chief Interest Rate Strategist Ira Jersey:

"Higher-than-expected CPI data should rule out the possibility of a 50 basis point rate cut and may raise doubts in the market about whether the Fed will cut by the anticipated 150 basis points. Our focus is on consumers, so next week's retail sales report is crucial for the outlook of bond yields for the rest of the month."

"Inflation in core services continues to slow down, with most unexpected increases seeming to come from the volatile costs of autos... The rise in core CPI is primarily due to the influence of volatile sectors, while stable sectors continue to decline. This indicates that over time, inflation will trend downward once again."

TradeStation's Market Strategy Chief David Russell:

"This data may not look as bad as it seems because housing costs have slowed significantly. This is important as housing costs have always been the biggest ongoing issue with inflation. Friday's data is not great news but is unlikely to have a significant impact as the Fed is still in the early stages of its easing cycle. The days of CPI causing major turmoil may be fading away."

Jamie Cox of Harris Financial Group:

"The anti-inflation trend is still ongoing, but anyone who thinks the Fed will cut rates by another 50 basis points in November is completely wrong. When rates are not high enough to curb growth, they are also not high enough to completely contain inflation. The Fed will lower rates, but the next steps will be very cautious."

Olu Sonola, head of economic research at Fitch Ratings in the United States:

"The good news is that the overall trend is still anti-inflation, but the bad news is that service industry inflation remains a problem. Inflation is weakening, but has not disappeared. Following the unexpectedly strong employment data in September, this report encourages the Fed to maintain a cautious pace in the easing cycle. The most likely path at the moment is still a 25-basis-point rate cut in November, but a rate cut in December should not be taken for granted."

Michael Brown of Pepperstone:

"Despite stronger-than-expected employment reports in September and continued progress in anti-inflation, we expect the Fed to cut rates by 25 basis points at the remaining two FOMC meetings this year, and this easing pace may continue until 2025, until the federal funds rate returns to approximately neutral levels, around 3% by next summer. Essentially, this is what is called 'Fed support,' which continues to exist in a strong and flexible manner, providing participants with confidence while keeping stock declines relatively shallow and seen as buying opportunities."

Florian Ielpo of Lombard Odier:

"Although inflation data is generally unwelcome, it is beneficial to corporate earnings, thereby benefiting stocks. A large part of the recent stock market rise can be attributed to the dual drivers of falling interest rates and stimulus in the Chinese economy. However, as inflation proves more stubborn than expected, interest rates may face temporary upward pressure."

Editor/Lambor