US Core CPI Hits 0.3%, the Line Waller Drew for a 50bp Hike

US core consumer prices rose 0.3% in October, landing on the threshold Federal Reserve Governor Christopher Waller had set hours earlier for considering a half-point rate increase in December.

The Bureau of Labor Statistics reported at 8:30 a.m. ET on Tuesday that the consumer price index rose 0.4% in October after a 0.6% gain in September. Both the headline and core readings beat forecasts. Economists polled by Reuters had expected 0.3% and 0.2%.

Waller spoke in London before the data came out. In prepared remarks, he said he was leaning toward supporting a 25-basis-point hike in December. If core CPI ran "around 0.3 percent or even higher," he said, a 50-basis-point hike "should be considered." Hiking only 25 basis points, he said, would put the Fed's credibility at risk.

The report also had no annual rate. The BLS said it "cannot publish 12-month percent changes for October 2026" for indexes lacking October 2025 data. No prices were collected that month because of the 2025 lapse in appropriations. September's annual CPI rate was 3.7%. Reuters reported that economists, averaging the neighbouring months as a workaround, put October at 3.9% to 4.0%.

In Hong Kong, the HKMA set its Base Rate at 4.25% on Sept. 17. That is 50 basis points above the lower end of the Fed's 3.75% to 4% range, under a formula that moves with the Fed's range. Under the same formula, a quarter-point Fed increase would put the Base Rate at 4.50%, and a half-point increase at 4.75%.

The Base Rate is the foundation for the HKMA's discount-window rates. It does not directly set mortgage pricing, which tracks one-month HIBOR or banks' best lending rates. After the September move, HSBC and BOC Hong Kong held their best lending rates at 5%, and Standard Chartered Hong Kong held at 5.25%. The three banks left those rates unchanged in late October, when one-month HIBOR was about 2.71%.