At the start of the year, the Federal Reserve expected inflation to ease and rates to come down. The central bank instead raised rates by 25 basis points in September, the first increase since 2023, as inflation remained above its 2% target for more than five years. In October, the Consumer Price Index rose 0.4% from the previous month, compared with the 0.3% economists expected, while core CPI increased 0.3%, above the 0.2% forecast. Nearly 88% of traders anticipate another 25-basis-point increase in December, with some scenarios pointing to a 50-basis-point hike. PGIM continues to expect rates to rise by 100 basis points in total, with the first increase in December followed by quarterly adjustments, as the labor market remains stable and tariff risks persist.
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