Fed Is One Bad Inflation Number Away From Hiking Rates, Dutta Says

• Weak September payrolls put an October Fed rate hike on 'life support'.
• The Fed's core inflation forecast for Q4 2027 is 2.5%, but Q1 core inflation has been near 4% annually since 2023.
• Despite low unit labor costs and weak wage pressure, actual inflation remains above target, making the speaker reluctant to fully buy into a dovish thesis.

Neil Dutta suggests that while an October rate hike might be 'on life support' due to weak September payrolls, the Federal Reserve is still 'one bad inflation number away' from pulling the trigger on another hike. He expresses caution about fully embracing a dovish outlook, noting that core inflation has consistently run above the Fed's targets despite some weak labor cost data.