The Federal Reserve has considered the inflation rate a key factor in its monetary policy.
The Fed's key short-term interest rate is now in a range of between 5.25% to 5.5% — after the central bank kept rates unchanged at the Sept. 20 meeting.
As of the morning of Oct. 12, according to CME Group's FedWatch tool, shortly after release of the CPI data, market participants' pricing of fed fund futures indicated there is a 89.3% probability that the Fed will again keep rates unchanged when it issues its next monetary policy decision on November 1, and only an 10.7% probability it will hike rates by 25 basis points.
Johan Grahn, head ETF market strategist at Allianz Investment Management, said a decision by the Fed "to do anything but wait and see from here on out, whether it is a decision to hike (rates) or cut, will demand unambiguous quantitative evidence to ground the decision in."
Allianz IM has $19.5 billion in assets under management.
According to the minutes of the Fed's Sept. 19-20 meeting, "a majority of participants judged that one more increase in the target federal funds rate at a future meeting would likely be appropriate."
The Fed minutes also revealed that the committee was worried that current inflation numbers "remained unacceptably high" and further evidence would be required for them to be confident that inflation was on a path to meet the Fed's 2% mandate.