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TD: Oct CPI Report Doesn't Change "Transitory" Debate

US OUTLOOK/OPINION

TD summarizes October's surprisingly high inflation reading as being "in large part [due] to travel parts but rents were up solidly as well, while the health insurance part rose sharply".

  • TD highlights the strong pickup in health insurance "reflecting the annual updating to reflect retained earnings at insurance companies" - but will not affect the PCE reading.
  • TD: "We don't think the report changes the debate about "transitory" in any significant way, and the test for the Fed will be what happens in the first half of 2022, but the data will increase the focus on long-term inflation expectations measures."
  • TD expects "significant slowing" in inflation readings in the next year "as the boosts from reopening and fiscal stimulus fade and COVID-related supply constraints eventually ease."

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