Ahead of the FOMC Minutes tonight and the meeting coming up in December, PIMCO is seeing signs of inflation
- Inflation in core services ex shelter - which tend to be labor intensive - rose 0.39% month-over-month
- While one month does not a trend make, the October data move the needle in resolving the conundrum of the absence of wage pressures amid falling unemployment
- We continue to point to inflation in services ex shelter as the key for the Fed to reach its inflation target.
If the Fed can become reasonably confident of inflation lifting towards the 2% target there is little in the way of an initial rate hike
