Inflation report fuels Fed rate hike fears

It is 816. In just the last half hour, we are getting the latest snapshot on inflation data. Numbers are higher than expected, putting immediate heat and pressure on Washington right after the midterms. So this morning, we have Pat Raycamp joining us from 1834, division of Old National Bank, with a snapshot of what we are looking at, what it all means. Good morning. Good morning. You said it doesn't look good. It wasn't great data. Top this with the Vikings game last night, we're in a rut right now, yes. Yes. A lot of things were up, basically, you could throw a dart at the board, really just about everything, only a couple categories were down. Okay, what's the big impact on our economic picture here then? Right now, the one that I would take away is transportation services, we're up eight tenths of a percent month over month. It's gas prices. We've talked about this. First, you pay at the pump, and now we're seeing it filter down to what it costs to ship goods around the country. That's going to raise prices, too, overall in a lot of categories. At least gas prices now are coming down. A barrel of crude is under $90. We're starting to trend in the right direction. Gas prices have come down a little bit recently in the last couple of weeks. This data is measuring, though, October, which is now, what, 10 days back in the past. So we're seeing a little bit of progress. Over a Saturday, I think oil prices are up 30%. 32% since pre-Iran war. That's what's driving a lot of this. And still some of that is they've locked into different prices when we're talking about shipping and things like that. Let's talk about some areas. You said there were a couple that were positive. The only thing I saw down really was used cars and trucks were down month over month, about 1.2%. I think a lot of this, too, is car prices went out of control during COVID. A lot of the supply chains have healed, chips, semiconductors that are needed for cars. A lot of that has come through the system. But also, Interest rates on auto loans are up, so that's, I think, really suppressing demand, so they're cutting prices on unused cars and trucks to get them moved. Speaking of interest rates, Pat, what, if anything, do the numbers mean when it comes to the next Fed meeting at the Federal Reserve? Fed meets again December 9th and 10th. I think a hike in December is a near lock at this point. We don't have data year over year because October of 2025, the government was shut down. Right. We're looking right now as the analysts, the economic analysts had it right, 3.9% year over year. It's pretty close to 4%. Inflation's been trending in the wrong direction. Are we thinking a quarter point? There's a little bit of chatter now of a 50 basis point hike in December. Okay. That's the minority opinion. Sure. So I think a 25 point hike looks likely. Then again, a March of 2027. All right. Thank you. Thank you, guys. But no, thanks for explaining it to us and bringing us the info. It kind of goes with what happened to the bikes last night. If you need a used car or truck, probably now is a good time before the Fed raises rates in December and auto loans go up. Good to know. That's what I can take away from that. That's your positive. But still, those costs are still high. Maybe the next time I come back, the Vikings have a new quarterback and we can riff on that a little bit. There you go. There you go. Thanks, Pat. Thanks, you guys. Also a sports analyst. We appreciate your time. Thank you, Pat. Like we all are. Yeah. We're from our couch. Yeah, that's right. We all have ideas. Thank you, Pat. Thank you. All right.