The biggest slasher this month will likely be Jerome Powell since the inflation data the government released yesterday wasn’t as scary as projected, which is expected to keep the Fed on track to cut interest rates.

Consumer prices rose a relatively tame 0.3% for the month in September and 3% year over year. That’s below the 0.4% monthly inflation growth and 3.1% annual rise analysts had predicted.

The inflation report is the only recent government economic data the Fed has to inform its interest rate decision next week, since most of Uncle Sam’s number crunchers are on leave due to the shutdown. And investors are betting that the not-so-bad consumer prices report will put the Fed at ease about the potential impacts of cutting interest rates on inflation, allowing the central bank to focus on stimulating the anemic job market by lowering borrowing costs.

Better doesn’t mean good

Just because prices didn’t pop as much as economic wonks predicted, it doesn’t mean shoppers aren’t getting hit with sticker shock as inflation remains well above the Fed’s 2% annual goal.

Some price tags could be causing nostalgia for shopping in 2024:

• Coffee and beef prices rose 19% and 15%, respectively, in the year leading up to September, largely due to weather-related supply disruptions, as well as the impact of tariffs. Meanwhile, bananas, which were long considered inflation-proof, have become 5.4% pricier since April, a trend economists attribute to tariffs.
• Gardening services cost 14% more than in 2024, while repairing a car became 12% more expensive.

And it may get worse: Moody’s Chief Economist Mark Zandi expects tariffs to accelerate price growth in the coming months, with businesses passing on the cost of import duties to consumers for goods like furniture and appliances.

Looking ahead…there’ll probably be no inflation…report from the government next month due to the shutdown, the White House said. That means the Fed will have to rely on private-sector data for its last interest rate meeting of the year in December.—SK

Trump ends Canada trade talks over Reagan anti-tariff ad. President Trump announced on Truth Social Thursday night that he was halting all trade negotiations with Canada, the US’ second-largest trading partner, because of an ad criticizing the high tariffs he imposed on the country’s goods. Trump called the ad, which was released by the province of Ontario, “FAKE,” and said it was meant to interfere with the US Supreme Court case over the legality of the tariffs. The ad features real audio from parts of a speech given by former President Ronald Reagan criticizing tariffs (though Reagan was defending his own decision to place tariffs on Japan). Canadian Prime Minister Mark Carney said yesterday his country is ready to resume trade talks “when the Americans are ready,” and Ontario plans to pause the ads—though it is still slated to run during the World Series.

US sends aircraft carrier to the Caribbean in latest escalation. In the latest sign that the Trump administration is taking the phrase “war on drugs” literally, Defense Secretary Pete Hegseth ordered the USS Gerald R. Ford, which had been deployed in the Mediterranean, to the Caribbean, bringing with it dozens of fighter and surveillance aircraft, as well as other Navy warships to accompany it. The decision to send additional military firepower to the region comes after the administration recently conducted several fatal airstrikes on boats it accused of smuggling drugs, treating the people on them as combat enemies rather than criminals. It represents a major escalation of the US campaign against drug smuggling and Venezuela’s President Nicolás Maduro.