US Inflation Exceeds Forecasts, Pressuring Fed on Rate Hike Timing

US inflation accelerated in September, with the consumer price index rising 0.6% monthly and 3.7% annually, exceeding economist forecasts and increasing pressure on the Federal Reserve to raise interest rates further. Core CPI also beat expectations at 0.3% monthly and 2.6% annually. Rising gasoline prices, up 9.1%, drove over half of the monthly increase, while housing costs also climbed 0.4%. Market odds for an October rate hike jumped to roughly 43% from 22% before the report, with Treasury yields surging as investors priced in tighter policy. Analysts remain divided on timing, with some expecting a December move rather than October, citing volatile energy prices from the Iran conflict. The Fed, which raised rates last month to 3.75%-4.00%, will review September PCE inflation data later this month for further guidance.