Catenaa, Friday, October 24, 2025- The US Consumer Price Index rose less than expected in September, keeping the October Federal Reserve rate cut on track.
The CPI rose 3% over the year in September, the Bureau of Labor Statistics said Friday. While that was the highest annual inflation rate since January, it was below forecasters’ expectations for a 3.1% uptick.
Moreover, for the Fed, “core” inflation, which excludes volatile prices for food and energy, rose 3%, down from 3.1% in August and also below expectations.
Fed policymakers watch “core” inflation measures closely because they can be better indicators of the trajectory of prices. Food and energy prices can rise and fall significantly for reasons that have nothing to do with broad inflation trends.
The Federal Reserve is likely to cut its benchmark interest rate in the coming months, which will put downward pressure on interest rates for all types of short-term loans, as well as yields for CDs and high-yield savings accounts.
The report solidified expectations that the Federal Reserve will cut its benchmark interest rate next week when the Fed’s policy committee is scheduled to meet.
Fed officials cut the fed funds rate by a quarter-point in September to boost the faltering job market. The Fed had held rates high to counteract inflation, but concerns about prices have taken a back seat to worries about a hiring slowdown in recent months.
Even before Friday’s report, the Fed was widely expected to go ahead with a rate cut. Fed officials had penciled in two rate cuts at their remaining two meetings this year, as noted in their quarterly monetary policy projections last month.
Financial markets are pricing near certainty the Fed will cut the fed funds rate to a range of 3.5% to 3.75% by the end of the year, a half a percentage point below its current level, according to the CME Group’s FedWatch tool.
