US September CPI Rises to 3.7%, Pressuring Global Monetary Policies

The Consumer Price Index (CPI) for September, released by the U.S. Department of Labor this week, showed an annual increase of 3.7%, higher than the market consensus of 3.4% to 3.5%. While this figure remained flat compared to August's 3.7%, it still indicates that inflationary pressures have not significantly eased. Analysts noted that although core prices (excluding food and energy) dipped slightly, the continued climb in fuel prices was the primary driver pushing up the overall CPI. Gasoline and natural gas prices rose by approximately 4.5% and 3.0% respectively in September, making the impact of energy costs on the CPI weighting significantly pronounced.

The U.S. Federal Reserve (Fed) has raised interest rates multiple times since 2022 to curb inflation, accumulating a total of 25 basis points in hikes to date. Although core inflation has dropped below 3.2%, the Fed remains in a wait-and-see mode, concerned that volatility in energy prices could delay the decline in inflation. The rise in September's CPI serves as another reminder to the market that if energy prices fail to recede in the short term, the Fed may need to prolong or intensify its tightening pace, further raising the federal funds rate. This not only impacts U.S. financial markets but also triggers a chain reaction in global capital flows.

The market's immediate reaction to the data manifested as a strengthening U.S. dollar, with the US Dollar Index rising by nearly 0.4%, while yields on 10-year U.S. Treasury bonds ticked slightly higher. Investors are concerned that high inflation could drive interest rates up, leading to stock market volatility. For businesses, rising raw material costs are compressing profit margins, particularly for energy-intensive industries. On the consumer front, although wage growth is slightly outpacing prices, real purchasing power remains under pressure.

On a global scale, if U.S. inflation remains persistently high, it will prompt central banks in other major economies to adopt similar rate-hike measures. The European Central Bank, the Bank of England, and the Bank of Japan have all indicated that they will continue to monitor energy prices and supply chain bottlenecks, adjusting policies as appropriate. Should U.S. inflationary pressures intensify, global monetary policy could trend toward greater tightening, thereby affecting international trade flows and cross-border investments.

In summary, although the September CPI data did not break significantly past previous levels, the signal sent by rising fuel costs cannot be ignored. The Fed's task of balancing economic growth with curbing inflation will become even more difficult. Market participants need to closely monitor energy price trends, changes in core inflation, and the Fed's policy statements to evaluate future interest rate trajectories and their impact on investment portfolios. (Source of facts: Central News Agency)