#美国9月PPI大超预期 #每周来晒 September PPI Surges to Four-Year High—Will the Fed Take Drastic Action in December?

Following Wednesday’s hotter-than-expected CPI, the PPI once again confirmed mounting inflationary pressure. U.S. PPI rose 6.3% year over year in September, far above the expected 5.3%, marking the largest increase since December 2022; it rose 1.3% month over month, also well above the expected 0.5%, marking the largest increase since March 2022. Core PPI, excluding food and energy, was also strong. It rose 5% year over year and 0.7% month over month, both above expectations.

Energy Drives PPI Surge
Rising energy prices were the biggest driver of this round of price increases, with pricing pressure spreading across every corner of the U.S. economy. In September, prices for goods in final demand rose 2.6%, the largest increase since the data was first calculated in December 2009. Energy prices surged 10.8%, accounting for more than 80% of the overall increase in goods prices; gasoline rose 20.3%. Wholesale food prices rebounded 1.2% after falling for three consecutive months. The retail sector also came under pressure. Another report released the same day showed that retail sales rose 0.8% in September, above economists’ forecast of 0.4%, but slowing from the more than 1% growth recorded the previous month. Excluding auto and gasoline sales, retail sales rose just 0.2% last month. This indicates that as price pressures intensify, the momentum of U.S. consumer spending is weakening, while accelerating inflation is further eroding the purchasing power of wages and squeezing household budgets.

Will the Fed Hike by 25 or 50 Basis Points in December?
Tonight’s data further confirmed the strength of U.S. inflation.
The market expects rates to remain unchanged in October. CME FedWatch shows a 72.9% probability of rates remaining unchanged in October and a 27.1% probability of a 25-basis-point hike. Attention has now shifted to December.
Most people currently believe a December hike is essentially certain, with disagreement only over its size: the probability of no change is just 10.7%, the probability of a cumulative 25-basis-point hike is 66.1%, and the probability of a cumulative 50-basis-point hike is 23.1%.
Chris Zaccarelli of Northlight Asset Management believes the Fed will keep rates unchanged at its October meeting, partly because the meeting falls close to the U.S. midterm elections.
Jason Schenker, president of market research firm Prestige Economics, also believes the Fed is unlikely to raise its benchmark rate this month.
His reasoning is that much of the data released Wednesday was collected before the Fed’s September rate hike, leaving insufficient information to support another hike at the October meeting.
For December, institutions disagree over the size of the hike. Schenker believes that if inflation has not been curbed more forcefully and substantially by December, the Fed may opt for a 50-basis-point hike to suppress inflation more aggressively.
Citigroup, meanwhile, expects the Fed to raise rates by 25 basis points in December 2026, revising its previous forecast that the Fed would keep rates unchanged through the end of this year. UBS has pushed back the end of the hiking cycle: it expects the Fed to deliver its third hike in March 2027, compared with its previous forecast that the hiking cycle would end in December.

Longer-term concerns stem from inflation’s persistence. Chris Rupkey, chief economist at FWDBonds, said that as long as geopolitical risks continue to drive up energy costs, companies will be forced to pass on cost pressures, and inflation’s persistence could compel the Fed to raise rates further and maintain higher rates in 2027. The latest remarks from several Fed officials have been cautious, emphasizing observing first and acting later. Chicago Fed President Goolsbee said it is not yet clear whether current rates are sufficient to bring inflation back to the 2% target, and he favors waiting for more data before deciding whether to raise rates further; however, if inflation data remains at current levels over the coming months, the Fed cannot simply stand by.
San Francisco Fed President Daly believes a rate hike may be necessary, but there is still ample time to make a careful decision. She said the risk of inflation remaining above target is still elevated, while the labor market remains stable, allowing the Fed to focus on maintaining price stability. Fed Governor Bowman also said inflation remains above target, but she does not believe there is a need to rush into another rate adjustment. She emphasized that after the last rate hike, some time is needed to observe developments in financial conditions before taking further action.