The Federal Reserve could fall short of its 2 percent inflation target for eight consecutive years, according to its own projections, which place the return to that level in 2029. Oil prices surged after Iran closed the Strait of Hormuz and attacked regional energy infrastructure, while massive annual investment by artificial intelligence hyperscalers kept economic growth and inflation strong. October consumer prices exceeded expectations, with core prices rising 0.3 percent from the previous month, leading some officials to consider a 50-basis-point rate hike in December. The Fed, whose policy rate stands between 3.75 percent and 4 percent, is now under pressure to tighten more aggressively to preserve its credibility and prevent inflation expectations from becoming unanchored.
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