Two Fed dissenters want a hike, but Q3 wage costs rose a steady 0.8% while September core inflation hit 3.1% on oil and input prices. Thursday's productivity and unit labor cost data, forecast at +3.0% and +1.5%, will say which is driving prices.
The FOMC left the funds rate at 3.75%–4% after a 10-2 vote, with Chair Kevin Warsh arguing that waiting until December for more data costs little. Source
The Fed's hawks and its chair may be reading the same data and blaming different causes for inflation. The FOMC held the funds rate at 3.75% to 4.00% on Oct. 28, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of a quarter-point hike. The statement called productivity growth and capital investment both strong, which is the argument for an economy that can run hot without wages pushing prices up. This week's labor data will say whether that argument holds.
