Slowing US inflation lifts hopes Fed done with rate hikes

The news: US consumer prices were unchanged in October in the first such reading in more than a year, bolstering the view that the Federal Reserve is probably done raising interest rates.

The numbers: The flat October reading in the consumer price index followed a 0.4% rise in September. On an annual basis, the CPI climbed 3.2% after rising 3.7% in September. Economists polled by Reuters had forecast the monthly CPI to gain 0.1% and increase 3.3% on a year-on-year basis.

The context: The lower-than-expected reading was largely due to Americans paying less for petrol, which offset the continued increase in rents and 0.3% gains in food prices. The year-on-year CPI rises have come down from a peak of 9.1% in June 2022. Most economists believe the US central bank's fastest monetary policy tightening campaign since the 1980s is now over. Financial markets are even anticipating a rate cut next May, according to CME Group's FedWatch tool. The data pushed US Treasury yields lower and sparked a stock market rally on Tuesday.