**US Inflation Rises in October, Casting Doubt on Future Fed Rate Cuts**

US inflation witnessed a notable increase in October, causing uncertainty around the Federal Reserve's decision on interest rates for the remainder of the year. The Consumer Price Index (CPI) jumped by 2.6% compared to the same time last year, up from a 2.4% rise in September, as per the latest report from the Labor Department.

On a month-to-month basis, the CPI also saw a steady increase of 0.2%, aligning with economists' predictions and mirroring the growth seen in September. Core inflation, which strips out the volatile food and energy prices, advanced by 3.3% year-over-year in October. Monthly, core inflation grew by 0.3%, maintaining the same pace as the previous month.

Amidst this inflationary environment, investors hold mixed expectations about a potential third round of interest rate cuts in December. Federal Reserve Chair Jerome Powell has signaled some ambiguity regarding further reductions this year. "Really the question is - is December," Powell remarked in a recent press conference. "By December, we'll have more data."

Shelter prices played a significant role, accounting for more than half of the total inflation figure, as revealed by the Bureau of Labor Statistics. Shelter inflation, which encompasses housing, rent, and hotels, climbed by 0.4% in October, doubling September’s 0.2% rise. Meanwhile, food prices saw a more moderate increase of 0.2% in October, down from a 0.4% rise in September, with grocery prices ticking up just 0.1%, compared to a 0.4% increase the previous month.

The Federal Reserve is scheduled to meet next on December 17-18. According to the CME FedWatch tool, there is currently a 62.1% probability that the central bank will lower rates at this upcoming meeting. Ken Mahoney, CEO of Mahoney Asset Management, expressed confidence in a December rate cut despite the latest CPI report. He stated, "Powell's rhetoric last time is that they are most likely going to remain on this path...so for us, this [CPI report] comes as still being pretty goldilocks and it should not change the fact that there will still be a December cut."

Inflation has significantly decreased from its pandemic-induced peak of 9% in 2022. However, reaching the Federal Reserve's target of 2% might be challenging. According to BeiChen Lin, an investment strategist at Russell Investments, "The last stretch of the inflation fight can be filled with twists and turns."

Adding another layer of complexity, the job market showed weaker-than-expected results in October. Employers added only 12,000 jobs, the lowest total since December 2020, attributed to major strikes and hurricanes that month. This figure contrasts sharply with economists' expectations of 100,000 new jobs. The unemployment rate remained steady at 4.1%, with the number of unemployed little changed at 7 million.

The lukewarm job growth could impact perceptions of the Federal Reserve’s strategy, specifically its recent rate cuts, and the broader economic outlook. The Bureau of Labor Statistics noted that the employment numbers in certain industries might have been influenced by recent natural disasters.

As the year-end approaches, all eyes will be on the Federal Reserve's next moves, particularly whether they will deem it necessary to cut rates in December to stabilize the economy.