WS #16014
US industrial production grew 2.2% year-over-year in September, a significant acceleration from the 1.4% prior reading and well above the 0.7% month-over-month estimate. Despite this inflationary pressure, Federal Reserve official Kevin Warsh signaled a dovish stance, causing October rate-hike odds to plummet to 14%. This divergence suggests the market is pricing in a Fed that will tolerate slightly higher inflation to support growth, a dynamic that supports equities but pressures the dollar.
Industrial Production & Fed Policy
US industrial production grew 2.2% year-over-year in September, a significant acceleration from the 1.4% prior reading and well above the 0.7% month-over-month estimate. Despite this inflationary pressure, Federal Reserve official Kevin Warsh signaled a dovish stance, causing October rate-hike odds to plummet to 14%. This divergence suggests the market is pricing in a Fed that will tolerate slightly higher inflation to support growth, a dynamic that supports equities but pressures the dollar.