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<ul class="summary-list"><li>The upcoming inflation report will help determine the Fed's next move. </li><li>Friday's surprisingly strong jobs data has slashed bets of a half-point rate cut.</li></ul>The labor market's unexpected surge in September has left investors wondering about the path of Federal Reserve policy after the central bank said it's shifted focus to the labor market after years of battling inflation. However, following the strong payroll report, market commentators say they're still concerned that inflation may not be completely in the rear-view — and next week's consumer price index report will be key. The US saw an astonishing 254,000 new jobs added last month, smashing consensus estimates of 147,000. The unemployment rate dropped to 4.1%.According to economist Mohamed El-Erian, this permits the Fed to once again devote some of its attention to fighting inflation. Inflation concerns took a back seat in recent months as the central bank <a target="_blank" href="https://www.businessinsider.com/fed-rate-cut-explained-inflation-labor-market-conditions-outlook-recession-2024-9">shifted focus</a> toward what appeared to be a deteriorating labor picture. But with September's jobs report crushing expectations, concerns may <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-10-04/summers-says-50-basis-point-cut-in-september-was-a-mistake">have been premature</a>. "For the Fed, it means push back much harder against pressure from the markets to put you in the single-mandate box," El-Erian told <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-10-04/el-erian-warns-fed-after-jobs-data-inflation-is-not-dead">Bloomberg TV</a>. "Enough talk about 'inflation is dead.' Inflation is not dead. Enough talk about the Fed should only be concerned about maximum employment."UBS suggested that the upcoming consumer price index report will be the next big thing for markets. "CPI for September will be a key data release. If prices rise faster than expected on top of the stronger labor data, chances for the Fed to skip the November meeting will increase," UBS senior economist Brian Rose said in a Friday note.Bank of America analysts wrote on Friday that the Fed may have panicked last month and that another jumbo cut is probably not warranted. The bank adjusted its forecast for the November Fed meeting to call for a 25-basis-point move after previously predicting 50 basis points. Few analysts have implied that the Fed will leave interest rates unchanged next month, but investors have markedly readjusted expectations.Virtually no trader projects that the Fed will slash interest rates by a half-point in November, although the odds of another big move stood at around 33% before Friday's jobs report. <a target="_blank" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">CME FedWatch data</a> now indicates a 99% chance of a quarter-point cut.Just 1% expect rates to be unchanged. How inflation data could compound these forecasts will be known on Thursday, when the CPI report comes out.Though banks such as Barclays have suggested that the job market's strength has the potential to renew inflation concerns down the line, a large upswing is by no means a consensus call.For instance, Bank of America forecasts a 0.1% and 0.3% month-over-month gain in September's headline and core CPI, respectively. Those moves shouldn't be enough to impact the Fed's thinking.Still, with inflation still slightly above the central bank's 2% target , some analysts are cautioning investors not to forget about price pressures. According to Principal Asset Management's Seema Shah, the labor surprise only makes this more relevant."Markets will need to keep a closer eye on inflation as, now, there are policy risks on both sides of the economy," the chief global strategist said.

'Inflation is not dead': Consumer prices are still in focus for investors despite the Fed's labor-market pivot 

<ul class="summary-list"><li>Inflation accelerated as expected in October.</li><li>The consumer price index increased 2.6% from October 2023, matching the forecast.</li></ul>As expected by economic forecasters, inflation heated up in October.The consumer price index sped up as expected to a 2.6% year-over-year growth rate in October from <a target="_blank" class="" href="https://www.businessinsider.com/inflation-september-cpi-consumer-price-index-federal-reserve-interest-rates-2024-10">September's rate of 2.4%</a>.Inflation had been cooling down for most of 2024. Before the latest reading, the last uptick in the headline year-over-year rate was in March.Core CPI, which excludes volatile food and energy prices, rose 3.3% in October from a year ago, matching the forecast and the previous year-over-year increase.The Federal Reserve will likely want to see signs of inflation continuing to come down to its 2% target as Federal Open Market Committee members decide whether to continue cutting interest rates. There are still a lot of data releases to come out before the year's final scheduled FOMC meeting in December, including further reports for inflation measures like the CPI.The Fed decided in its November meeting to <a target="_blank" class="" href="https://www.businessinsider.com/federal-reserve-cuts-interest-rates-quarter-point-powell-inflation-election-2024-11">cut interest rates by 25 basis points</a>, which was largely expected and smaller than <a target="_blank" class="" href="https://www.businessinsider.com/fed-cuts-interest-rates-how-much-september-fomc-powell-inflation-2024-9">September's 50-basis-point cut</a>.Before the latest CPI report, <a target="_blank" class="" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">CME FedWatch</a> showed investors were assigning around a 60% probability to a 25-basis-point cut in December. After the CPI news release, that increased to around 70%.November's jobs report, to be published in early December, will also help Americans and the Fed better understand the labor market in the fall after employment readings in <a target="_blank" class="" href="https://www.businessinsider.com/october-jobs-report-unemployment-rate-nonfarm-payroll-growth-federal-reserve-2024-11">October</a> were surprisingly weak amid hurricanes and strikes."We're trying to be on a middle path where we can maintain the strength in the labor market while also enabling further progress on inflation," Fed chair Jerome Powell said at a press conference on November 7.This is a developing story. Please check back for updates.

Inflation heated up in October as expected

<ul class="summary-list"><li>Since 2020, wages have outpaced inflation for the majority of American workers.</li><li>Average wages for most US workers are up roughly 25.7% since 2020, while inflation is up about 20.9%.</li></ul>American consumers have been frustrated by <a target="_blank" class="" href="https://www.businessinsider.com/high-prices-inflation-sticking-interest-rate-hikes-stock-market-2024-5">high prices</a> over past years, but there's some good news: <a target="_blank" class="" href="https://www.businessinsider.com/wage-growth-faster-than-inflation-first-time-2-years-2023-6">wages</a> have outpaced inflation since the start of the COVID-19 pandemic.Since 2020, average hourly wages for most US workers have risen faster than the consumer price index, meaning income has maintained its purchasing power against rising prices.Furthermore, <a target="_blank" class="" href="https://www.businessinsider.com/wage-growth-faster-than-inflation-first-time-2-years-2023-6">real wages</a> — earnings adjusted for inflation — have been positive over the <a target="_blank" class="" href="https://www.epi.org/blog/average-wages-have-surpassed-inflation-for-12-straight-months/">past year</a>, according to the Bureau of Labor Statistics, meaning workers are gaining purchasing power.But while wage gains show promising signs for US workers, it can take longer for consumers' perspectives to shift; many Americans are still reckoning with past years' <a target="_blank" class="" href="https://www.businessinsider.com/inflation-cost-of-living-what-is-middle-class-housing-market-2024-4">sticker shock</a> and <a target="_blank" class="" href="https://www.businessinsider.com/housing-crisis-unaffordable-high-rent-prices-cost-burdened-renters-cities-2024-7">high housing costs</a>.<h2 id="aa403d6e-35c8-4365-aee2-c63b2d01f926">Economic data vs consumer sentiment</h2>Nearly four in five US voters said price increases were the top source of their financial stress in the last three months, according to the <a target="_blank" class="" href="https://www.ft.com/content/7aa63450-5ff2-4ea3-b639-1a21db372527?emailId=97961c1a-deb9-48c2-a1b8-95b4d7d4c1d0&amp;segmentId=1ce3de53-bbd6-f782-fb6e-1124c8f8297f">FT-Michigan Ross Poll</a>.While wage gains have outpaced inflation, it can be difficult for consumers to feel the growth, and plenty of people still miss the "good old days" of lower prices.According to Bankrate Analyst Sarah Foster, that's because economists and consumers see prices differently.Economists pay attention to inflation indicators which measure the rate of change of prices. Meanwhile, many consumers focus on the price levels for individual goods (like grocery store receipts) and how they compare to previous years, Foster said.While inflation is now slowing, many Americans still feel burdened by what they see as a jump in the price tags of various items over the past four years."They remember how much it used to cost to fill up their gas tank; they remember how much it used to cost to buy a cart full of groceries," Foster said.Since 2020, prices have risen 20.9%, according to the Bureau of Labor Statistics. However, across that same period, average hourly earnings for production and nonsupervisory workers — most US workers — have risen roughly 25.7%.Furthermore, the 25.7% increase in hourly wages for production and nonsupervisory workers is slightly ahead of the 23.1% increase in wages for all private workers, meaning employees have gained a bit more than their bosses.That wage growth is due in part to a tight labor market and state-level minimum wage increases from 2019 to 2023, according to the nonprofit think tank <a target="_blank" rel=" nofollow" href="https://www.epi.org/publication/swa-wages-2023/">Economic Policy Institute</a>.Nonetheless, wage growth has differed across industries, and while average growth is strong, high prices can be crippling for those whose incomes have paced behind inflation, Foster said.Furthermore, Foster said that industries with strong wage growth, like food services, leisure, and hospitality, are often low-paying jobs to begin with, meaning people are already sensitive to higher prices.<h2 id="2a0eff72-8496-4bfb-8b12-31cbd2fd5faa">Wages are still beating inflation</h2>Consumer prices rose 3.0% year-over-year in <a target="_blank" href="https://www.businessinsider.com/inflation-cpi-june-prices-food-energy-fed-interest-rate-cuts-2024-7#:~:text=The%20consumer%20price%20index%20increased,%25%20month%2Dover%2Dmonth.">June</a>, according to the Bureau of Labor Statistics, the lowest rate in a year and far below the pandemic-era peak of 9.1% year-over-year in June 2022.Meanwhile, average hourly earnings for production and nonsupervisory workers increased 4.0% year-over-year in June, continuing a yearlong trend of hourly wage growth beating out inflation.Since spring 2023, year-over-year wage growth for production and nonsupervisory workers has consistently been above inflation.In another positive sign for people's wallets, prices also decreased 0.1% from May to June, marking the first month-over-month drop since the start of the COVID-19 pandemic.There were <a target="_blank" class="" href="https://www.businessinsider.com/why-costs-keep-rising-inflation-goes-down-eggs-tickets-insurance-2024-7">some price outliers</a>, such as uncooked beef, which was up 10.5% year-over-year in June. Nonetheless, inflation has come down a lot since 2022.Still, prices themselves have not. Overall, price levels are up roughly 7% since inflation's peak in 2022. Yet, wages are up about 10% in the same period, highlighting that income has maintained its power.And higher price levels can be good for the economy. The Federal Reserve targets a 2% inflation rate, so even in a healthy economy, price levels are rising — what matters is managing the rate at which they increase and how that compares to rising incomes.In fact, broad and prolonged deflation — falling prices — is a recipe for high unemployment, economist Paul Krugman wrote in a July 16 <a target="_blank" class="" href="https://www.nytimes.com/2024/07/16/opinion/inflation-prices-economy.html">New York Times column</a>.While US consumers adjust to higher prices, strong wage growth should help ease affordability concerns, Krugman wrote.Have you had a pay increase but still feel burdened by high prices? Please reach out at <a target="_blank" class="" href="mailto:jtowfighi@businessinsider.com">jtowfighi@businessinsider.com</a>.

Wages have outpaced inflation since 2020 but many consumers still feel burdened by prices 

<ul class="summary-list"><li>President-elect Donald Trump said he would implement tariffs on imported goods.</li><li>Economists said the proposals could boost inflation and raise prices for consumers.</li></ul>One of the first policies President-elect <a target="_blank" class="" href="https://www.businessinsider.com/election-results-trump-harris-presidential-election-2024-11">Donald Trump</a> is expected to enact after being sworn into office is imposing <a target="_blank" class="" href="https://www.businessinsider.com/cost-expensive-goods-price-impact-presidential-election-scenarios-trump-harris-2024-10#imported-goods">taxes on imported goods</a>.Many economists say these tariffs, as well as some of his other proposals, could kick-start another bout of inflation and interest-rate hikes.Trump has said that his proposals would not impact US prices. "I am going to put tariffs on other countries coming into our country, and that has nothing to do with taxes to us. That is a tax on another country," he said in an August speech.Some experts have argued <a target="_blank" class="" href="https://www.businessinsider.com/trump-tax-plan-tarriffs-benefits-top-earners-study-2024-10">otherwise</a>. Economists and investors project that taxes imposed on imports will be passed on to American consumers in the form of higher prices. In an economic chain reaction, households would then pay higher interest rates on borrowing of all kinds as the Fed moves to tame that newly rekindled inflation.<h2 id="28eee089-e5e3-42d1-bc61-18122840af26">Ramping up tariffs from Trump's first term is expected to eat into Americans' wallets</h2>On the campaign trail, one of Trump's cornerstone proposals was a 60% <a target="_blank" class="" href="https://www.businessinsider.com/where-does-trump-vance-stand-on-china-tariffs-inflation-taxes-2024-7">tariff</a> on goods imported from China and a 10% to 20% tariff on imports from other countries.The US Census Bureau reported that broad tariffs would likely affect the prices of automobiles, drugs for human and veterinary use, food and beverages, furniture, and household appliances.Trump could announce these changes as soon as he takes office because they would not require congressional approval, but because implementation could take time, consumers would not see higher prices immediately.An <a target="_blank" class="" href="https://www.piie.com/sites/default/files/2024-09/wp24-20.pdf">analysis</a> from the nonpartisan Peterson Institute examined Trump's proposed 60% tariff on goods imported from China and estimated that it would boost inflation by 0.4 percentage points in 2025. The estimate does not include Trump's proposal for a 10% to 20% tariff on other imports.Markets are also <a target="_blank" class="" href="https://markets.businessinsider.com/news/bonds/surging-treasury-yields-after-trump-win-show-borrowers-may-not-get-relief-2024-11">expecting higher inflation</a> under Trump; bond yields surged following Trump's victory. That led to the 30-year fixed mortgage rate rising, meaning homebuyers are on track to see higher interest rates on loans.An <a target="_blank" class="" href="https://taxpolicycenter.org/taxvox/tpc-trump-tariffs-would-raise-household-taxes-and-slow-imports">analysis</a> by the nonpartisan Tax Policy Center found that Trump's policies would decrease posttax incomes by an average of $1,800 in 2025. A separate <a target="_blank" class="" href="https://www.americanprogressaction.org/article/trumps-tariff-would-cost-the-typical-american-household-roughly-1500-each-year/">analysis</a> by the left-leaning Center for American Progress said that his tariff plans could cost the typical American household an extra $1,500 a year.Tariffs are typically used to raise government revenue and bolster domestic manufacturing. Trump enacted them in his first term as part of his "America First" policies, including a 25% tariff on Chinese goods that ultimately <a target="_blank" rel="" class="" href="https://www.businessinsider.com/trump-tariff-trade-war-risk-china-exports-great-depression-economy-2024-5">led to a trade war</a> between the two economies. While they did not significantly impact inflation, they did raise taxes for consumers. The Tax Foundation <a target="_blank" rel="noopener noreferrer" class="c-link" href="https://www.businessinsider.com/where-does-trump-vance-stand-on-china-tariffs-inflation-taxes-2024-7">estimated</a> that Trump's tariffs during his first term amounted to a nearly $80 billion tax increase on Americans buying Chinese imports.Trump's win is also expected to influence the Federal Reserve's upcoming decisions on interest rates. While it's too soon for the Fed to make any adjustments since Trump has not yet implemented any tariffs, members of the Federal Open Market Committee will likely begin discussing how Trump's future economic policies could affect consumers — including whether the central bank would need to hike interest rates in the future in response to inflationary pressure.The Fed is expected to <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cuts-federal-reserve-election-jerome-powell-inflation-jobs-2024-11">cut interest rates by 25 basis points</a> on Thursday, and Fed chair Jerome Powell will likely offer some insight into the Fed's direction following Trump's victory.However, the future of the Federal Reserve <a target="_blank" class="" href="https://www.businessinsider.com/interest-rate-cut-trump-fed-powell-reaction-independence-history-2024-9">is uncertain under Trump</a>. The president-elect has previously suggested that he would like to have a say over interest-rate decisions, something presidents do not currently have. This raises the question of whether the central bank would continue to remain politically independent.Americans will likely learn more about what to expect from Trump as the year comes to a close. While Trump has maintained that his policies will help the economy and leave Americans better off, the Nobel Prize-winning economist Joseph Stiglitz <a target="_blank" class="" href="https://www.businessinsider.com/trump-presidency-policies-inflation-economy-americans-joseph-stiglitz-letter-2024-6">previously told Business Insider</a> that the "general consensus" among experts is that "the Trump administration would be more inflationary.""The broad assessment of the consequences of that is that the Fed would be forced to raise interest rates, and all that combined would still serve to increase inflation even as unemployment increased and GDP slowed," he said.

Get ready for inflation and interest rates to rise again

Prime Minister Narendra Modi, on Wednesday, congratulated Reserve Bank of India's (RBI) Governor, Shaktikanta Das for bagging an A+ grade rating in the Global Finance Central Banker Report Cards 2024. Prime Minister in a post on social media "X" said, "Congratulations to RBI Governor Shri @DasShaktikanta for this feat, and that too for the second time. This is a recognition of his leadership at the RBI and his work towards ensuring <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword> and stability." <keyword id="20850250" type="General" weightage="20" keywordseo="RBI-Governor-Das" source="keywords">RBI Governor Das</keyword> has been awarded the A+ grade rating for the second consecutive year. The Central Banker Report Cards, published annually by Global Finance since 1994, grade the central bank governors of nearly 100 key countries, territories, and districts, as well as the European Union, the Eastern Caribbean Central Bank, the Bank of Central African States and the Central Bank of West African States. Grades are based on an "A+" to "F" scale for success in areas such as <keyword id="21364628" type="General" weightage="20" keywordseo="inflation-control" source="keywords">inflation control</keyword>, economic growth goals, currency stability and <keyword id="22859834" type="General" weightage="20" keywordseo="interest-rate-management" source="keywords">interest rate management</keyword>. "A" represents an excellent performance, down through "F" for outright failure. "Central bankers have waged war against <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword> over the past few years, wielding their primary weapon: higher interest rates. Now, countries around the world are witnessing the tangible results of these efforts, as inflation has dropped significantly," said Global Finance founder and editorial director Joseph Giarraputo. The RBI has been successful in controlling the larger macroeconomic situations in the country. The apex bank is actively working to push economic growth through its <keyword id="20900764" type="General" weightage="20" keywordseo="monetary-policies" source="keywords">monetary policies</keyword>. The RBI recently kept the the <keyword id="20094323" type="General" weightage="20" keywordseo="repo-rate" source="keywords">repo rate</keyword> unchanged at 6.5 per cent after the deliberations of the Monetary Policy Commitee meeting earlier this month. The move reflects the central bank's cautious approach amid ongoing economic uncertainties. Announcing the monetary policy decisions, Das had said that the decision to keep the repo rate steady comes amidst persistent concerns about inflation, which remains above the RBI's target range. RBI Governor Das said that the inflation will moderate from July onwards as the monsoon has improved and global food prices have shown signs of easing in July. The Q1 <keyword id="19999655" type="General" weightage="20" keywordseo="Consumer-Price-Index" source="keywords">Consumer Price Index</keyword> (CPI) inflation for the current financial year (2024-25) is projected at 4.5 per cent. CPI inflation for the first quarter of the next financial year (Q1 2025-26) is projected at 4.4 per cent, as announced by the RBI Governor. India's retail inflation, after breaching 5 per cent in June, softened drastically in July. In line with the moderation in retail inflation, wholesale inflation in India too witnessed a sharp decline in July. The annual rate of inflation based on all India Wholesale Price Index (WPI) numbers is 2.04 per cent (provisional) for July 2024 (over July 2023).

PM Modi congratulates RBI Governor Das on A+ rating in Global Finance Report

<ul class="summary-list"><li><a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/what-is-inflation">Inflation's</a> downtrend may not be as straightforward as some investors think, according to Charles Schwab.</li><li>The brokerage firm pointed to elements that could push prices higher, like Trump's tariffs and tax cuts.</li></ul>The Fed's mission to lower consumer prices could soon face some snags — and there are a handful of signs investors should be watching out for to determine if prices are on the rise again, according to Charles Schwab.Strategists at the brokerage firm expect a "choppy" downward path for inflation, despite the fact that overall inflation in the US is cooling. In a new research note, the firm cited a number of pressures in the economy that could buck the disinflation trend and send prices back higher."We think inflation will continue to trend lower, but there are a few potential risks on the horizon, including Federal Reserve interest rate cuts, stronger-than-expected economic growth in recent months, and policy proposals by incoming US President Donald Trump," strategists wrote, pointing to the president-elect's plan to levy <a target="_blank" class="" href="https://www.businessinsider.com/how-trump-tariffs-will-impact-prices-technology-clothes-appliances-furniture-2024-11">tariffs</a> on US imports, <a target="_blank" class="" href="https://www.businessinsider.com/tax-cut-tariff-plan-outlook-presidential-election-scenarios-harris-trump-2024-10">cut taxes</a>, and potentially lower the supply of labor by <a target="_blank" class="" href="https://www.businessinsider.com/trump-harris-immigration-jobs-arizona-economy-mass-deportation-employment-wages-2024-10">restricting immigration</a>."<a target="_blank" class="" href="https://www.businessinsider.com/trump-tariffs-higher-inflation-fed-interest-rates-taxes-mortgage-rates-2024-11">Tariffs</a> tend to act as a one-time price increase as the costs are passed from importing companies to consumers. Similarly, tax cuts have been proposed that could provide more stimulus to an economy already growing at a healthy pace. Immigration reform could mean higher labor costs," the note added.Trump has pushed back on the notion that his economic plan is inflationary, and said he would lower prices for Americans during his second term. He levied tariffs during his first term as president without a significant inflation surge, but experts say the tariffs Trump would impose this time around are far more wide-sweeping, explaining the difference in inflation forecasts.Meanwhile, the Fed may already be facing some resistance in its goal to get <a target="_blank" class="" href="https://www.businessinsider.com/inflation-october-cpi-consumer-price-index-federal-reserve-interest-rates-2024-11">inflation</a> back down to 2%. Prices rose 2.6% year-per-year in October, in-line with what economists had expected, but hotter than the prior month's 2.4% increase, according to the Bureau of Labor Statistics."Looking forward, though, it's worth assessing potential risks to disinflation," Schwab added.Strategists flagged four things in markets that could signal if inflationary pressures in the economy are picking up:<h2 id="41d73f46-2e9d-46d7-89ba-4c38f91b2650">1. Labor costs rising</h2>Labor costs have accelerated in recent months, with unit <a target="_blank" class="" href="https://fred.stlouisfed.org/series/ULCNFB">labor costs</a> among all workers in the business sector rising to 3.4% year-over-year in the third quarter, according to Federal Reserve data.<div type="image" title="Chart showing unit labor costs" height="1240" width="1420" msid="115383807" hostid="261" sizebytes="47210"></div>Higher wages are considered <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/what-causes-inflation#:~:text=When%20people%20anticipate%20higher%20inflation,as%20a%20wage%2Dprice%20spiral.">inflationary</a>, as they raise costs for businesses and could lead firms to hike prices, a dynamic known as a <a target="_blank" class="" href="https://www.businessinsider.com/salary-negotiations-inflation-expectations-economy-2022-11">wage-price spiral</a>."It's too soon to say whether that uptrend will continue, but if labor supply is restricted and ends up putting upward pressure on wages, faster unit labor cost growth could unleash further momentum in inflation," Schwab strategists said.<h2 id="3bc506f7-2207-403b-a65c-f253e9941afb">2. The relationship between stocks and bonds</h2>Stocks typically move opposite to <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/bond-yield">bond yields</a>, as higher interest rate expectations priced into the bond market would be bearish for equity prices.The rolling 120-day correlation between the <a target="_blank" class="" href="https://markets.businessinsider.com/index/s&amp;p_500">S&amp;P 500</a> and the yield on the benchmark <a target="_blank" class="" href="https://markets.businessinsider.com/rates/u-s--rates-10-years">10-year US Treasury</a> has ticked into positive territory, which means stocks and yields are rising in tandem due to expectations of strong economic growth.If the correlation moves back into negative territory, that could signal greater concern over inflation in the economy, strategists said.<div type="image" title="Chart showing stock and bond yield correlation" height="1241" width="1656" msid="115383805" hostid="261" sizebytes="46810"></div>"If the correlation flips back into negative territory, though, that would be consistent with inflation (again) being the main driver of downside risk for stocks," the firm wrote. "It's too soon to say that will be the case, but the risk is worth monitoring as we start to turn the corner into 2025."<h2 id="52c75ff6-d092-4b23-9c06-94ea3840e795">3. Rising Treasury yields</h2><a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/trump-trade-us-presidential-election-dollar-treasuries-stocks-crypto-djt-2024-11">Yields</a> have been climbing ever since Trump secured his second-term in office, with the 10-year yield surpassing 4.4% the day after the vote, its highest level since early July.<div type="image" title="Chart showing 10-year US Treasury yield" height="1064" width="1283" msid="115383804" hostid="261" sizebytes="33954"></div>The increase is reflective of higher interest-rate expectations in the market, a sign that investors are concerned about future inflationary pressures."Concerns about a rebound in inflation on the back of stronger-than-expected economic growth since September, and the potential for expansive fiscal policy are the major drivers. Markets are beginning to dial back expectations for further rate cuts in response to inflation concerns," Schwab strategists said.<h2 id="1a1f6685-af6f-424d-abf4-e9e18ac4ef79">4. Economic momentum is building.</h2>The economy looks to be growing stronger than investors expected — another factor that could fuel inflation. The <a target="_blank" class="" href="https://www.businessinsider.com/citi-economic-surprise-index-2013-12">Citi Economic Surprise Index</a> has soared in recent months, climbing from a level of around -50 this summer to 40 as of November.<div type="image" title="Chart showing Citi Economic Surprise Index against 10-year yield" height="939" width="1626" msid="115383808" hostid="261" sizebytes="65916"></div>"Stronger growth suggests that the Fed may not lower short-term rates as much as anticipated just a few months ago. Adding to the shift in the view of Fed rate path is the likelihood of higher inflation under proposed policies from the incoming administration," strategists said."We expect the Federal Reserve to continue with rate cuts over the next few months if inflation continues to trend lower. However, we are assuming a slower and shallower path of rate cuts in 2025 than we did just a month ago," they continued.Expectations for <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-today-fed-powell-comments-rate-cut-odds-rally-2024-11">Fed rate cuts</a> have pulled back in recent weeks as traders digest Trump's election victory and ready for a new chapter in the economic narrative. The odds that the Fed will pause its rate-cutting cycle in December rising to 42%, up from 14% odds priced in a month ago, according to the <a target="_blank" class="" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">CME FedWatch tool</a>.

4 signs of re-inflation investors should watch out for, Charles Schwab says

The Reserve Bank of India (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) has started its three-day monetary policy committee (MPC) meeting in Mumbai on Tuesday. The meeting will conclude on Thursday, when the RBI will announce its decisions on the <keyword id="20094323" type="General" weightage="100" keywordseo="repo-rate" source="keywords">repo rate</keyword> and other matters. The repo rate, which has been maintained at 6.5 per cent since it was last increased in February 2023, is widely expected by experts to remain unchanged for the ninth consecutive bi-monthly policy review. Experts highlight that <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword> in India remains above the RBI's target range, making it unlikely that the central bank will implement policy cuts until inflation reaches the target of 4 per cent. However, the expert added that the RBI may consider rate cuts in the October meeting. Banking expert Ashutosh Khajuria commented: "Monetary Policy Committee (MPC) may continue to hold the policy signalling Repo rate and wait for <keyword id="19979707" type="General" weightage="20" keywordseo="Consumer-Price-Inflation" source="keywords">Consumer Price Inflation</keyword> to decisively fall below 4 per cent, the target rate. For the present, the continuation of the current stance is widely expected. MPC in India may change the stance and rate action by the beginning of the second half of the year in their October meeting at the earliest." The experts also noted that while <keyword id="20196112" type="General" weightage="20" keywordseo="core-inflation" source="keywords">core inflation</keyword> has been contained and commodity prices, particularly metals, have dropped by 15-20 per cent from their 2024 peak, food inflation remains a concern and needs to be closely monitored to ensure stability in overall CPI numbers. The Managing Director of a major bank, who preferred not to be named, told ANI: "During the last policy meeting we could see some voting in favour of a <keyword id="19920203" type="General" weightage="20" keywordseo="rate-cut" source="keywords">rate cut</keyword>. At the same time, we could see The Reserve Bank of India's (RBI) Governor Shaktikanta Das on July 11 said it is too early to talk on the interest rate cut due to the uncertain economic environment and inflation remaining close to five per cent. Considering both, our expectation is that the rate cut cycle may start from the next meeting and no change in <keyword id="19950650" type="General" weightage="20" keywordseo="interest-rates" source="keywords">interest rates</keyword> this time." RBI Governor Shaktikanta Das had also emphasised in the last policy briefing that food inflation is still a concern and that the regulator is not in a hurry to make a decision on rate cuts. A recent report by the State Bank of India (SBI) also noted that Consumer Price Inflation in India is expected to remain around 5 per cent for the financial year 2024-25, except for the months of September and October.

Repo rate cut unlikely in ongoing MPC meeting, but RBI may change it during October policy review: Experts

<ul class="summary-list"><li>Donald Trump and Elon Musk called out the pain caused by high levels of inflation in recent years.</li><li>Trump bemoaned that people can't afford groceries and savers have been "decimated" by rising prices.</li></ul>Donald Trump and <a target="_blank" href="https://www.businessinsider.com/elon-musk">Elon Musk</a> lamented the <a target="_blank" class="" href="https://www.businessinsider.com/inflation-housing-food-alice-rent-poverty-healthcare-wage-growth-cpi-2024-6">brutal impact</a> of rising prices in their X Spaces conversation on Monday."It's a disaster with inflation," the former US president said. "It doesn't matter what you make. The inflation has eaten you alive."The annualized pace of price increases soared to a 40-year high of more than 9% in June 2022. It has <a target="_blank" class="" href="https://www.businessinsider.com/inflation-cpi-june-prices-food-energy-fed-interest-rate-cuts-2024-7">slowed markedly</a> since then to 3% in June, but remains well above the Federal Reserve's 2% target.Trump specifically called out the <a target="_blank" class="" href="https://www.businessinsider.com/why-youre-still-spending-much-of-your-budget-on-food-2024-2">steeper cost of food</a> for families. As the Republican presidential nominee, he's incentivized to paint a dour picture of the economy under the Democrats, and promise he'll make things better if voters back him in November's election."They don't have enough money to buy groceries; the inflation has killed them," Trump said. "They used to be able to buy a whole cart, and today a lot of people just don't have the money. They go in and can't buy anything."<h2 id="c0292d01-998c-4040-8141-38ba2a6670d7">Savers punished</h2>Trump bemoaned that lifetime savers have been unfairly punished by soaring prices."The people that saved money … they got no interest on their money, and inflation destroyed them," he said. "Those people have been absolutely decimated."Americans were able to put away significant sums four of five years ago, Trump noted. "Today, they're <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/big-short-michael-burry-jpmorgan-consumer-inflation-rates-banking-crisis-2023-4">using all their money</a> and borrowing money just to live. It's a horrible thing that's happening."This historic bout of inflation has been <a target="_blank" class="" href="https://www.businessinsider.com/economic-outlook-pandemic-stock-market-crash-inflation-recession-rates-ai-2024-2">blamed on several factors</a>. The pandemic disrupted worldwide production, snarled supply chains, shuttered businesses, and fueled labor shortages. Russia's invasion of Ukraine roiled the international oil trade and caused energy prices to soar. World governments spent heavily to shore up their economies, stoking heavy demand in a period of constrained supply and causing prices to climb.Musk — the world's richest person, CEO of <a target="_blank" href="https://www.businessinsider.com/tesla-ceo-elon-musk">Tesla</a> and <a target="_blank" href="https://www.businessinsider.com/spacex-elon-musk">SpaceX</a>, and X's owner — agreed with Trump that inflation is a pressing problem during their conversation."A lot of people are concerned about the economy, a lot of people are concerned about inflation," he said. "Inflation is effectively a tax on people that saved money and for people that are working day to day."Musk blamed fast-rising prices on public officials splashing cash."Inflation comes from government overspending because the checks never bounce when they're written by the government," he said. "So if the government spends far more than it brings in, that increases the money supply. And if the money supply increases faster than the rate of goods and services, that's inflation."<h2 id="259f4a90-f256-467f-85ef-c9b9b9d1bb34">Deregulation call</h2>Musk called for authorities to cut back on spending and suggested a government efficiency commission be appointed to ensure public funds are spent wisely. He underlined the ballooning federal debt and the <a target="_blank" class="" href="https://www.businessinsider.com/us-national-debt-government-spending-stock-market-financial-crisis-economy-2024-3">spiraling size</a> of the interest payments required to service it."If you solve government overspending, you solve inflation, which improves the living standards of the average person," Musk said. He added that deregulation would help to eliminate rules and restrictions that make compliance costs "extreme for no reason."Musk has <a target="_blank" class="" href="https://www.businessinsider.com/elon-musk-fightingwars-alot-of-fronts-2024-8">frequently complained</a> about government overreach and red tape in recent years, making his latest comments unsurprising. But his companies have undeniably benefited from state funds in the form of clean-energy subsidies, tax credits, and space contracts. He may well see those as valuable uses of taxpayer money, and wish to cut waste elsewhere.Trump and Musk are right to say that prices are significantly higher now than even a couple years ago. However, inflation appears to be falling, <a target="_blank" class="" href="https://www.businessinsider.com/emergency-rate-cut-fed-recession-july-jobs-report-unemployment-powell-2024-8">freeing the Fed</a> to focus on bolstering growth and avoiding a recession by starting to undo the hikes to interest rates it's made in recent years to curb price growth.

Trump called inflation a disaster for consumers — and Musk blamed it on government waste

<ul class="summary-list"><li><keyword id="20335345" type="General" weightage="20" keywordseo="McDonalds" source="keywords" meta.keywordsubtype="org" meta.entityname="McDonald's" meta.hostid="261" meta.entityid="McDonald's">McDonald's</keyword> global sales fell for the second consecutive quarter, down 1.5%.</li><li>Fast-food chains have faced challenges from <keyword id="19999654" type="General" weightage="20" keywordseo="food-inflation" source="keywords">food inflation</keyword>, affecting <keyword id="20139791" type="General" weightage="20" keywordseo="consumer-spending" source="keywords">consumer spending</keyword> habits.</li></ul>Global sales at McDonald's have fallen for a second consecutive quarter as the fast-food chain struggled in international markets, especially France, the UK, China, and the Middle East. Sales were down 1.5% in its third quarter, following from a 1% slide in the previous quarter, ending June 30. Comparable sales in the US were virtually flat, up 0.3% from the same period in 2023, while sales in international markets dropped 2.1%. Sales in licensed international markets fell 3.5%. "We will stay laser-focused on providing an unparalleled experience with simple, everyday value and affordability that our consumers can count on as they continue to be mindful about their spending," McDonald's CEO Chris Kempczinski said in the earnings release. While sales dropped, <a target="_blank" class="" href="https://www.businessinsider.com/trying-most-expensive-mcdonalds-switzerland-disappointing-fries-best-burger-2023-12">the Golden Arches</a>' revenue increased 3% to $6.9 billion, beating the $6.82 billion figure that was the consensus of analysts. Net income declined 3%, down to $2.26 billion, down from $2.32 billion in the last quarter. Shares in McDonald's fell 2.7% in premarket trade after the results were announced. Fast-food restaurants have struggled with food inflation since the COVID-19 pandemic. The most recent <a target="_blank" class="" href="https://www.bls.gov/news.release/cpi.nr0.htm">US consumer price index</a>, released in early October, showed that the cost of food away from home rose 4% in the prior 12 months, significantly higher than gains in both grocery store prices and the overall CPI. Chains, including McDonald's, have responded to the soaring cost of ingredients and labor by raising menu prices. Consumers have felt the strain of rising costs. Analysts have said that some consumers are <a target="_blank" class="" href="https://www.businessinsider.com/why-fast-food-is-so-much-more-expensive-value-affordable-2024-4">comparing the rising cost of fast food to the slowing rate of grocery inflation</a> and choosing to cook more often at home instead of eating out. Lower-income customers have particularly felt the pinch. "The decline in comparable sales signals that consumers continue to retrench from eating out," Neil Saunders, managing director of GlobalData's US retail and consumer division, told Business Insider. "Negative comparable sales and higher costs have also put some pressure on the bottom line where both operating and net income are down," he said. It's uncertain how the <a href="https://www.businessinsider.com/mcdonalds-e-coli-outbreak-cases-rise-75-people-2024-10" target="_blank">recent E. </a><a href="https://www.businessinsider.com/mcdonalds-e-coli-outbreak-cases-rise-75-people-2024-10" target="_blank">coli outbreak</a> in several states might affect McDonald's fourth-quarter results. One person died, and at least 75 were sickened. The Food and Drug Administration has said that the slivered onions on affected <a href="https://www.businessinsider.com/mcdonalds-quarter-pounder-ecoli-outbreak-why-important-sales-2024-10" target="_blank">Quarter Pounder burgers</a> were "a likely source of contamination," and the supplier of the topping <a href="https://www.businessinsider.com/mcdonalds-supplier-taylor-farms-recalls-onions-amid-e-coli-outbreak-2024-10" target="_blank">has issued a recall</a>. Correction: October 29, 2024 — An earlier version of this story overstated what has been confirmed about the recent <keyword id="22099782" type="General" weightage="20" keywordseo="E-coli-outbreak" source="keywords">E. coli outbreak</keyword> linked to McDonald's. The FDA is still investigating the outbreak and has not conclusively settled on a cause, though it has said slivered onions from one of the chain's suppliers were "a likely source of contamination."

McDonald's sales dropped for the 2nd quarter in a row as customers keep tightening their belts

<ul class="summary-list"><li>This post originally appeared in the Insider Today newsletter.</li></ul>Happy Friday! Elections can be stressful, so take some tips from new research on how to lower your blood pressure. <a target="_blank" href="https://www.businessinsider.com/lower-your-blood-pressure-5-minutes-exercise-a-day-study-2024-11">Daily short, intense workouts</a> can be your best bet to fight disease and improve longevity.In today's big story, the Fed <a target="_blank" href="https://www.businessinsider.com/federal-reserve-cuts-interest-rates-quarter-point-powell-inflation-election-2024-11">cutting interest rates yesterday was never really in doubt</a>. What comes next isn't as clear.What's on deck:<ul><li>Markets: Goldman Sachs announced <a target="_blank" href="https://www.businessinsider.com/goldman-sachs-partners-revealed-see-full-list-names-diversity-women-2024-11">its newest class of partners</a>.</li><li>Tech: The stock market is already indicating <a target="_blank" rel="noopener" href="https://www.businessinsider.com/big-tech-winners-losers-trump-election-win-according-to-market-2024-11">winners and losers among Big Tech</a>.</li><li>Business: Hiring experts are predicting <a target="_blank" href="https://www.businessinsider.com/trump-win-affect-job-hiring-trends-and-employer-confidence-2024-11">a "Trump bump" for the jobs market</a>.</li></ul>But first, more relief … for now.If this was forwarded to you, <a target="_blank" href="https://www.businessinsider.com/subscription/newsletter/insider-today">sign up here.</a><h3 id="7fa5f018-5b05-4a37-a8dc-d3f89138bcb3">The big story</h3><h2 id="5fd547b9-ec52-41fc-8e08-4f4b27dd8097">The Fed's new conundrum</h2><div type="image" title="Jerome Powell on top of stock market chart going down." height="900" width="1800" msid="115090330" hostid="261" sizebytes="70080"></div>Americans got a bit more relief from the Fed, but questions are swirling about what the president-elect means for future plans.The Federal Reserve <a target="_blank" href="https://www.businessinsider.com/federal-reserve-cuts-interest-rates-quarter-point-powell-inflation-election-2024-11">cut interest rates by 25 basis points Thursday</a>, its second-straight reduction since September in a move that was largely expected. Additional rate cuts aren't as clear, though, as Donald Trump's proposed widespread tariffs <a target="_blank" href="https://www.businessinsider.com/trump-inflation-interest-rates-fed-rate-cuts-fomc-meeting-outlook-2024-11">could slow down the Fed's plans</a>.Economists have said Trump's 10-20% blanket tariff on most imported goods will cause inflation to flare up as producers and importers pass the cost of the tax onto consumers. Prior to the election, Nobel economist Paul Krugman said Trump's tariff plans would result in an "inflationary shock that is bigger than almost anything else you could do through federal policy."It's not just speculation from economists. The market is indicating inflation could lead the Fed to keep borrowing rates high. Treasury yields soared the day after the election, a sign Wall Street sees interest rates staying elevated.Interest-rate traders have also recalibrated their expectations. The chances of a 25-point December rate cut went from 83% at the start of the month down to as much as 63% yesterday following the Fed's announcement, according to the CME FedWatch tool. (It currently stands around 75%.)<div type="image" title="Photo of Donald Trump" height="1279" width="1920" msid="115090327" hostid="261" sizebytes="95086"></div>Still, speculating on what could come from a president-elect is a tricky game.Greg McBride, chief financial analyst at <a target="_blank" href="http://Bankrate.com">Bankrate.com</a>, told Insider Today that Fed Chair Jerome Powell didn't indicate a pause in cuts was coming in December during Thursday's press conference. Powell also emphasized the election won't impact the central bank's near-term actions, McBride added."Until there are policy specifics being passed into law, there is nothing for the Fed to put in their economic models and they won't speculate or assume anything in the interim," McBride wrote via email.There's also the question of whether Trump's tariff would be as inflationary as some fear. During his first term, the former president issued tariffs against China that didn't cause prices to spike.Trump's proposals this time around are much more aggressive, but it's not clear what will actually be put in place."Nobody knows what will be implemented and what is just posturing for negotiation," McBride added.Dominique Lapointe, director of macro strategy for Manulife Investment Management, told Insider Today via email the firm's base case is still a 25-point cut in December. The Fed would change course in reaction to tariffs only if they are official and making an impact, meaning the central bank's policy likely wouldn't change until mid-2025, Lapointe added.One thing that is clear: <a target="_blank" href="https://www.businessinsider.com/powell-wont-resign-federal-reserve-step-down-trump-election-2024-11">Powell's not leaving</a>.When a reporter asked the Fed leader if he would resign if Trump, who has been critical of him, asked him to step down, his response was simple: "No."<h3 id="77f31a4c-8462-4e3d-a71f-838cb79493fb">News brief</h3><h2 id="1fcd294b-3f53-425f-9f20-4093e8623b59">Top headlines</h2><ul><li>Democrats wished the election was about jobs. <a target="_blank" rel="noopener" href="https://www.businessinsider.com/how-trump-won-election-high-prices-cost-of-living-unemployment-2024-11">Trump's win showed it was about prices</a>.</li><li><a target="_blank" rel="noopener" href="https://www.businessinsider.com/china-economy-local-government-debt-rescue-trump-us-presidential-election-2024-11">China announced a $1.4 trillion stimulus package</a> to boost its economy on the heels of Trump's election.</li><li>Airbnb reported its earnings. <a target="_blank" rel="noopener" href="https://www.businessinsider.com/airbnb-earnings-shares-most-interesting-things-cohost-2024-11">Here are four highlights</a>.</li><li>Trump said he will divide Russia from China. <a target="_blank" href="https://www.businessinsider.com/donald-trump-plan-divide-china-russia-axis-is-likely-fail-2024-11">It's a tough bromance to break</a>.</li><li><a target="_blank" href="https://www.businessinsider.com/peter-thiel-prediction-correct-election-trump-harris-2024-11">Peter Thiel's 'contrarian'</a> election prediction came true.</li></ul><h2 id="8120060b-ae66-48dc-b149-f0489a30ffa2">3 things in markets</h2><div type="image" title="Photo of MAGA hat on exchange desk" height="655" width="1000" msid="115090331" hostid="261" sizebytes="44410"></div><ol><li>Morningstar thinks you should stay the course with your investment plan. Trump's win sent the stock market surging, but that <a target="_blank" href="https://www.businessinsider.com/trump-trade-election-investing-stock-market-strategy-sp500-valuations-morningstar-2024-11">doesn't mean you should rethink your investing strategy</a>, Morningstar Senior US Market Strategist Dave Sekera said. His call for restraint is partly due to how high stock valuations currently are, although he does see opportunity among small-caps.</li><li>The new Goldman execs who just got the call of a lifetime. Goldman Sachs tapped<a target="_blank" href="https://www.businessinsider.com/goldman-sachs-partners-revealed-see-full-list-names-diversity-women-2024-11"> 95 people to join its exclusive partnership</a> on Thursday, a record high under CEO David Solomon. Twenty-six of the new partners are women, a group closely watched after a series of high-profile female partner exits.</li><li>Trump's election might be Citi's saving grace. The bank has spent more than $7.4 billion addressing regulators' concerns, specifically about its data and risk problems. <a target="_blank" href="https://www.businessinsider.com/trump-election-citi-jane-fraser-regulators-frc-occ-2024-11">Donald Trump could ease that pain</a>. The president-elect has signaled he'd cut down on Wall Street oversight, previously pledging he'd eliminate 10 rules for each new one.</li></ol><h2 id="f4b54806-7f81-450c-ba32-92560d4fae9b">3 things in tech</h2><div type="image" title="Musk and Trump." height="2499" width="3329" msid="115090332" hostid="261" sizebytes="268836"></div><ol><li>How Elon Musk swung Pennsylvania for Trump. The tech tycoon <a target="_blank" href="https://www.businessinsider.com/elon-musk-pennsylvania-america-pac-donald-trump-harris-2024-11">spent millions on the Keystone State</a> to deliver it to Trump, launching a last-minute canvassing effort and untested ground-game techniques. Musk's strategy could usher in a "new era" in campaign spending, one political scientist told BI.</li><li>Big Tech's biggest winners and losers after Trump's victory. Which companies stand to gain the most under a new Trump presidency? BI looked at the two-day stock performance of <a target="_blank" rel="noopener" href="https://www.businessinsider.com/big-tech-winners-losers-trump-election-win-according-to-market-2024-11">many of the largest tech companies to find out</a>.</li><li>Trump's plan to "never ban" TikTok will be tough to fulfill, legal experts say. The former president campaigned on the promise that TikTok would be here to stay. <a target="_blank" rel="noopener" href="https://www.businessinsider.com/donald-trump-block-tiktok-ban-legal-experts-2024-11">But legal experts told BI he's only got two options to try and save it</a> — and neither of them are straightforward.</li></ol><h2 id="9260fa45-d397-4b3c-b4f8-4bb193976216">3 things in business</h2><div type="image" title="Image of Walmart sign outside store" height="1280" width="1920" msid="115090336" hostid="261" sizebytes="228442"></div><ol><li>Retail giants prepare for Trump 2.0. Tariffs are the biggest concern for superstores like Walmart, Target, and Costco. If the president-elect follows through on his campaign promises, consumers could foot the bill of high tariffs through higher prices. On the other hand, tax cuts could spur spending — <a target="_blank" href="https://www.businessinsider.com/trump-win-retail-impact-walmart-costco-target-tariffs-tax-cuts-2024-11">but they'd take many months to see results</a>.</li><li>The job market under Trump. Hiring experts expect a "Trump bump" as employers get comfortable posting openings now that the election's outcome is clear. They forecast a postelection hiring rush and <a target="_blank" href="https://www.businessinsider.com/trump-win-affect-job-hiring-trends-and-employer-confidence-2024-11">increased demand in some sectors</a>, particularly tech.</li><li>David Zaslav is optimistic about Trump's effect on Big Media. The Warner Bros. Discovery CEO wanted a president who was more open to M&amp;A, since his company has been eyeing consolidation for a while. A second <a target="_blank" href="https://www.businessinsider.com/wbd-trump-zaslav-consolidation-earnings-2024-11">Trump administration might provide that opportunity</a>, Zaslav said on WBD's earnings call, but it's too early to be certain.</li></ol><h2 id="1ad7b482-3f4b-44b4-81b6-a864aa386478">In other news</h2><ul><li>The Polymarket 'whale' actually made $85 million, <a target="_blank" href="https://www.businessinsider.com/polymarket-whale-banked-85-million-profit-trump-president-election-win-2024-11">far more than originally thought</a>.</li><li><a target="_blank" href="https://www.businessinsider.com/harris-lost-biden-unpopularity-trump-election-2024-11">Harris couldn't escape</a> Biden's unpopularity.</li><li>Investors accuse the ex-CEO of the company that helped take Trump Media public of <a target="_blank" href="https://www.businessinsider.com/ex-ceo-patrick-orlando-lawsuit-trump-media-investors-shares-2024-11">stiffing them out of millions of shares</a>.</li></ul><h2 id="9f5d80ac-3466-429f-a50a-2ffbb70c65ff">What's happening today</h2><ul><li>Paramount, Sony, and other companies report earnings.</li><li>Grammy Award nominations are announced.</li></ul>The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. Ella Hopkins, associate editor, in London. Amanda Yen, fellow, in New York. Milan Sehmbi, fellow, in London.

Fed cuts rates again, but Trump's tariff plan sparks inflation fears and market uncertainty

<div type="image" title="SBI report says inflation will remain around 5 per cent this fiscal" agency="ANI" msid="112275933" hostid="261" caption="&amp;lt;p&amp;gt;SBI report says inflation will remain around 5 per cent this fiscal &amp;lt;/p&amp;gt;"></div>The Consumer Price <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">Inflation</keyword> in India is expected to remain around 5 per cent in the financial year 2024-25 except for September and October month, according to a research report by <keyword id="13222" type="General" weightage="20" keywordseo="sbi" source="Orion">SBI</keyword>. The report also noted that the inflation outlook in India remains a critical focus for the <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> (RBI). Recent data indicates that the <keyword id="19999655" type="General" weightage="20" keywordseo="Consumer-Price-Index" source="keywords">Consumer Price Index</keyword> (CPI) inflation rose to 5.08 per cent in June 2024, driven primarily by higher food and beverage prices. "CPI inflation is expected to remain below or close to 5.0 per cent in the remaining months, except for Sep'24 and Oct'24" said the report. The report also added that the monsoon season plays an important role in shaping food prices, and while the current monsoon has shown a satisfactory surplus, excess rainfall could lead to crop losses, adversely affecting food inflation. The RBI's ability to manage inflation expectations is crucial, especially as it navigates the delicate balance between supporting <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword> and maintaining <keyword id="19960158" type="General" weightage="20" keywordseo="price-stability" source="keywords">price stability</keyword>. "With monsoon progressing satisfactorily with 2 per cent surplus till date and progress of area coverage under Kharif crops showing 2.9 per cent yoy, we expect inflation to remain within RBI target in FY25. However, with La Nina getting precedence, excess rainfalls could result in crop loss and thus a negative impact on food prices" the report added. In response to the evolving economic landscape, the report mentioned that the RBI is likely to continue its stance of withdrawing accommodation. This approach aims to address inflationary pressures while ensuring that the economy remains on a growth trajectory. However, the central bank faces challenges in policy transmission, as deposit rates have shown downward rigidity despite a declining weighted average lending rate (WALR). This situation complicates the RBI's efforts to implement effective monetary policy. "Even though the Banks are chasing deposits to fund the incremental credit growth, RBI recent report suggests, the weighted average lending rate (WALR) on fresh rupee loan decreased by 11 bps from the beginning of the year (i.e. from 9.43 in January'24 to 9.32 in June'24)" the report noted. Looking ahead, the RBI's decisions will be influenced by both domestic and global economic conditions. The potential for a recession in the US and geopolitical tensions could impact inflation dynamics in India. As such, the RBI's monetary policy will need to remain flexible and responsive to these external factors while striving to achieve its inflation targets and support sustainable economic growth. (ANI)

SBI report says inflation will remain around 5 per cent this fiscal

<ul class="summary-list"><li>The Fed may have declared inflation victory too early, Stanley Druckenmiller said.</li><li>Inflation could could be bottoming right now, the billionaire investor told a Norges Bank podcast.</li></ul>Stanley Druckenmiller isn't ready to put inflation aside yet, and says the Federal Reserve shouldn't either."I'm a little worried that the Fed has declared victory too early," the billionaire investor said about consumer prices on a <a target="_blank" href="https://www.youtube.com/watch?v=-5Weeox0Xus">Norges Bank podcast</a>. "With credit spreads tight, gold at new highs, equities roaring, no sign of material weakness in the economy — of course, there's some spots — that just makes me nervous that this thing could turn up again."He's referring to the Fed deciding to start cutting interest rates, essentially prioritizing a flagging labor market over inflation viewed to be in check. After an initial 50-basis-point cut in September, the Fed lowered rates by <a target="_blank" href="https://www.businessinsider.com/federal-reserve-cuts-interest-rates-quarter-point-powell-inflation-election-2024-11">another 25 basis points this week</a>.But history should caution against presuming that price growth will stay low, Druckenmiller suggested. Consider <a target="_blank" href="https://www.businessinsider.com/inflation-fed-powell-mistake-1970s-runaway-stagflation-unemployment-interest-rates-2024-10">the 1970s</a>, a tumultuous period in which inflation fell and rebounded, he said."It went back up again, and the number of months would correlate to the bottom being right now," Druckenmiller estimated.In his view, the Fed's decision to pursue deeper interest rate cuts at a time of economic strength is a mistake caused by the bank's obsession with data-points. When inflation eases, the Fed lowers rates to make sure economic growth keeps up — and has justified its cuts given shifting labor prints.That's the wrong approach, Druckenmiller said: "To me, the Fed's job is to avoid the big, big mistakes like the '70s, like the great financial crisis, like the big inflation we just had, but all this fine tuning and worrying about a soft landing that that is not the job of the Fed. In my opinion, it's to maximize employment for the long term, not for the next three months or the next four months."The long-term picture may, in fact, be quite different now that Donald Trump has returned to the White House.Though the podcast was recorded prior to the president-elect's victory, Druckenmiller cited that Trump's tariff plans are marginally inflationary. Meanwhile, immigration has been a non-inflationary source of growth for the US, he said; it is <a target="_blank" href="https://www.businessinsider.com/3-migration-firms-what-they-are-hearing-after-the-election-2024-11">now at risk under Trump</a>.

Billionaire investor Stanley Druckenmiller says the Fed may have declared victory on inflation too early

<ul class="summary-list"><li>President-elect Donald Trump proposed broad tariffs on imports, including up to 60% on goods from China.</li><li>Economists said his tariff proposals could spike inflation as companies tend to pass costs on to consumers.</li></ul>Some executives have warned that price hikes are on the way if President-elect <a target="_blank" class="" href="https://www.businessinsider.com/trump-tariffs-higher-inflation-fed-interest-rates-taxes-mortgage-rates-2024-11">Donald Trump's tariff plans</a> go into effect.Trump proposed a <a target="_blank" class="" href="https://www.businessinsider.com/cost-expensive-goods-price-impact-presidential-election-scenarios-trump-harris-2024-10#imported-goods">60% tariff on goods imported from China</a> on the campaign trail, coupled with a 10% to 20% tariff on goods imported from other countries. While the president-elect could choose not to enact tariffs at that scale once he assumes office, economists <a target="_blank" class="" href="https://markets.businessinsider.com/news/bonds/surging-treasury-yields-after-trump-win-show-borrowers-may-not-get-relief-2024-11?_gl=1*192eyud*_ga*MTAyOTY4OTk4NC4xNzE0NDgyOTcz*_ga_E21CV80ZCZ*MTczMTM1NzQ1OS41MTQuMS4xNzMxMzU3NDcwLjQ5LjAuMA..">and the market</a> have predicted that his proposals would spike inflation and force the Federal Reserve to raise interest rates.A number of companies have already begun responding to Trump's election victory and the implications his tariff proposals will have on the costs of their goods. Executives told analysts on earnings calls that it would be difficult to maintain current prices under Trump's broad tariffs.Other companies are still waiting for more information from the president-elect. Tarang Amin, CEO of e.l.f. Beauty, told Business Insider that the company must first see the policy Trump enacts before making any changes to its pricing, and that a new policy wouldn't affect the business until after its 2025 fiscal year."We don't like tariffs because they are a tax on the American people," Amin said, adding that the company has been subject to a 25% tariff since 2019 due to policies from Trump's first term, "and at that time we pulled all the levers available to us to minimize the effects to our company and our community."Trump has previously said that his proposals would not influence prices on US goods: "I am going to put tariffs on other countries coming into our country, and that has nothing to do with taxes to us. That is a tax on another country," he said in an August speech.Below are the companies that are warning of price increases if Trump's tariff proposals are implemented.<h2 id="d204ee30-d902-48ac-9f04-107b42ca9d58">AutoZone</h2>Philip Daniele, CEO of auto parts company AutoZone, told analysts on a September earnings call that tariff policies have "ebbed and flowed over the years," and if Trump does implement more tariffs, "we will pass those tariff costs back to the consumer.""We generally raise prices ahead of that," Daniele said, adding that prices would gradually settle over time. "So, that's historically what we've done."<h2 id="2a0df8c2-9367-42c0-93cd-a96082916950">Columbia Sportswear</h2>Tim Boyle, CEO of Columbia Sportswear, told analysts on an October earnings call that the company is "very concerned about the imposition of tariffs. " While he considers Columbia adept at managing tariffs, "trade wars are not good and not easy to win."Boyle also <a target="_blank" class="" href="https://www.washingtonpost.com/business/2024/10/30/companies-tariffs-trump-prices/">told</a> the Washington Post in October that the company is "set to raise prices.""It's going to be very, very difficult to keep products affordable for Americans," he said.<h2 id="e0af6479-8e49-4477-a151-a5818db04f81">Stanley Black &amp; Decker</h2>Donald Allan, CEO of manufacturing company Stanley Black &amp; Decker, told analysts in an October earnings call that the company has been evaluating "a variety of different scenarios" to plan for new tariffs under Trump."And obviously, coming out of the gate, there would be price increases associated with tariffs that we put into the market," Allan said, adding that "there's usually some type of delay given the processes that our customers have around implementing price."Allan also said that the company would consider moving its production out of China to other countries, like Mexico, to reduce the impact of a 60% tariff on Chinese imported goods. Steve Madden was among other companies that announced plans to import fewer goods from China, with its CEO Edward Rosenfeld saying on an earnings call that the company has already started that process.

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