WASHINGTON—Consumer prices rose in October slightly below consensus estimates, potentially easing some worries that higher inflation could lead the Federal Reserve to take a much more hawkish stance on interest rates.
This brought the annual inflation rate to 2.1 percent in October, after advancing 2.2 percent in September.
The Federal Reserve, which has a 2 percent inflation target, left interest rates unchanged but signaled further gradual rate increases ahead after a two-day policy meeting last week. In its policy statement, the Fed noted that overall inflation was near 2 percent and the “indicators of longer-term inflation expectations are little changed, on balance.”
Overall inflation could slow in the months ahead due to a recent crash in oil prices, however, the odds of the Fed raising its benchmark rates in December are unchanged, according to Goldman Sachs.
“We’re seeing it basically in the tightening of the labor markets first, which, as you know, have gotten very tight now. We’re beginning finally to see average wages rise, and clearly there’s no productivity behind it,” Greenspan said.
With the unemployment rate falling to the lowest level in nearly 50 years, American workers have recently started to see their paychecks grow. Private-sector wages and salaries rose at an annualized rate of 3.1 percent in the third quarter, the biggest increase in a decade.
