Inflation’s Cooldown Gives the Fed Leeway

Sit down while you’re reading this: Fed policy makers made a dud prediction about how much inflation would cool at the tail end of 2023.

The Commerce Department on Thursday reported that its overall index of consumer prices—the Federal Reserve’s preferred inflation gauge—was flat in October from September, putting it 3% above its year-earlier level. That was its slimmest year-over-year gain since March 2021. Core prices, which exclude food and energy items in an effort to better track inflation’s underlying trend, rose 0.2% from September. That put them 3.5% above their year-earlier level for the smallest gain since April 2021.