OCTOBER 24, 2025 – September CPI came in as expected at 3.0%. My data expects CPI to increase to 3.1%-3.2% in the next report. Just a reminder, this has nothing to do with tariffs. But, those who think it does will be screaming they are right. A few months ago I forecast that the CPI would spend the 4th Quarter above 3%.
The market is giving a 99% chance that the Fed will reduce its rate at next week’s meeting by 25bp. Currently, the market has the Fed Funds Rate priced at 3.8%-3.9%. It is set at 4.0%-4.25%. For me, it looks like a 50/50 chance of staying unchanged or being reduced by 25bp. Setting the rate at 3.75%-4.0% would put it right on top of where the market has it. This is a rare time where the market is saying hey Mr. Powell either way is fine with us. Your call.
Shalom,
The Mann