The October CPI data has just been released in the USA, and there are comments from Federal Reserve officials that the inflation situation is developing in the right direction, seemingly reassuring investors expecting further interest rate cuts by the Fed next month, but his Federal Reserve colleagues' comments appear more cautious.

On Wednesday, November 13th, US stocks opened in the early trading session Eastern Time, just a few minutes after the CPI data was released, Minneapolis Fed President Neel Kashkari stated that the key data in the latest CPI report confirms that the inflation rate is heading towards the Fed's target of 2%.

Neel Kashkari, who will have voting rights at the Federal Open Market Committee (FOMC) meeting in 2026, emphasized that he has not yet examined the detailed data of this CPI report. However, he said that based on the overall data, he is confident in the downward trajectory of inflation. He said:

"Currently, I believe that inflation is moving in the right direction. I have confidence in this, but we need to wait. We need another month or six weeks to analyze the data before making any decisions."

Currently, some economists predict that with President Trump in office, the new US government's policies may increase upward pressure on inflation. Kashkari stated on Tuesday that if the Fed were to pause interest rate cuts next month, significant changes in the inflation outlook would be needed. He also mentioned that it would be difficult for the labor market to significantly heat up from now until the next FOMC meeting in December.

Also on Tuesday, John Williams, the New York Fed President and Vice Chairman of the Federal Reserve, who permanently holds voting rights at the FOMC meetings, stated that the Fed's interest rate decisions will depend on the data, "it may really depend on the economic conditions and inflation data we see", although it will be determined based on the situation in the future, "but I believe things are moving in the right direction."

The overall CPI and core CPI data for October in the USA released this Wednesday showed month-on-month and year-on-year growth rates in line with Wall Street expectations. Among them, the CPI increased by 0.2% month-on-month, the core CPI increased by 0.3% month-on-month, and 3.3% year-on-year, all in line with the September growth rate. The October CPI increased by 2.6% year-on-year, marking the first acceleration in year-on-year growth since March.

After the CPI is announced, pricing of swap contracts shows that traders expect the probability of the Fed cutting rates again in December to be around 80%. Huashang Jianwen mentioned that Ian Lyngen, the fixed income strategy director of BMO Capital Markets in the USA, as well as Lindsay Rosner, the multi-sector fixed income investment director at Goldman Sachs Asset Management, both believe that the latest CPI data makes a December rate cut the most likely outcome, as inflation is still in a cooling trend.

But the outlook for Fed rate cuts next year is not as clear. Ellen Zentner, Chief Economic Strategist at Morgan Stanley Wealth Management, stated that considering the uncertainty of tariffs and other future Trump policies, the market has been weighing the possibility of fewer rate cuts next year than previously expected, with the Fed possibly pausing rate cuts as early as January.

Logan: It is best to be cautious about rate cuts, as there are risks of inflation uptick due to demand and geopolitical factors.

Compared to Kashkari, Lorie Logan, President of the Dallas Fed who also has FOMC voting rights in 2026, seems less firm. Facing a slowing but still healthy labor market, she hinted on Wednesday at being open to slowing down the pace of rate cuts.

Some media outlets describe Logan as a type of Fed official who favors slowing rate cuts sooner rather than later. Some media also report that Logan mentioned that a rate cut in December may not be as certain as currently priced in by the market, which dampened expectations for a December rate cut, partially driving the US dollar higher during the session.

Logan stated that the Fed has made 'significant progress' in reducing inflation and restoring economic balance, and after that, 'I think it will likely take more rate cuts to complete this journey. But it's difficult to determine how many rate cuts may be needed and how quickly.' Logan said,

'It is best to proceed cautiously,' 'If we cut rates too much, beyond the neutral level, inflation could accelerate again, and the Federal Open Market Committee (FOMC) may need to change course.'

Logan stated that progress towards lower inflation is broad but has not yet reached the Fed's 2% target. She believes there is uncertainty about the level of the neutral rate and said that currently 'we are right at the (expected neutral rate range) top.'

Lindsay evaluates that the labor market is approaching balance, gradually cooling down, but not deteriorating substantially. Due to steady demand and continued geopolitical risks, the USA still faces the risk of inflation trending upward. Rising demand or supply shocks may keep inflation high. She mentioned some risks of inflation trending upward, such as consumer spending, and potential growth in business investment after the election.

Lindsay mentioned that the recent increase in US Treasury bond yields could potentially lead to economic growth slowing more than the Fed's expectations, posing risks to employment downturn. However, she also stated that due to the likelihood that the neutral interest rate may have risen in recent years, monetary policy's drag on the economy may not be as significant as it appears.

Editor/Somer