Today’s CPI Feeds the Recession-Inducing Hawks at the Fed
By Peter Navarro | November 10, 2026 | RealClearMarkets
Today’s hotter-than-expected inflation report just handed fresh ammunition to the Federal Reserve’s trigger-happy hawks. Christopher Waller, who is rallying Wall Street for a 50-point hike, is now the poster child.
Let’s be blunt about what Waller wants: A recession to fight an energy-price shock. What the Waller Fed doesn’t understand—where’s Stephen Miran when you need him—is that the energy price shock is already doing the job of the rate hike.
Even the Federal Reserve itself acknowledges that an adverse oil-supply shock simultaneously raises prices and reduces output and employment. Higher oil prices operate much like a tax on households: families spend more filling their tanks and have less money for restaurants, clothing, furniture, vacations, and everything else. Businesses face higher input costs and thinner margins.
To double down on that with an actual rate hike is to risk a recession within a matter of months. Indeed, the Fed is playing with recessionary fire. It wants to burn down Main Street to appease Wall Street.
Waller made his intentions crystal clear before the CPI report was even released. He said he favored at least a quarter-point hike in December even if inflation improved. If core CPI came in at 0.3 percent or higher, he said the Fed should consider a 50-basis-point hike.
Guess what? Core CPI came in at exactly 0.3 percent.
Headline CPI rose 0.4 percent in October, above the 0.3 percent consensus. Core CPI, excluding food and energy, also beat expectations of 0.2 percent. Using the preferred methodology necessitated by last year’s government shutdown, headline inflation is running at roughly 4 percent over the year and core at 2.8 percent.
The hawks therefore have their headline. But look under the hood.
Energy prices are up 20.8 percent over the past year. Gasoline is up an eye-popping 37.4 percent. Food rose 0.5 percent just in October. Airline fares are up nearly 30 percent over the year. Higher energy costs are bleeding through transportation, agriculture, manufacturing, and distribution.
This is precisely what an energy shock looks like.
Yes, core inflation is uncomfortable. Core services rose 0.3 percent in October and 3.5 percent over the year. The inflation pressures have broadened enough that the Fed cannot simply wave them away.
But neither should it pretend that raising the federal funds rate can produce a single extra barrel of crude oil. It cannot reopen the Strait of Hormuz. It cannot lower tanker-insurance premiums. It cannot expand refinery capacity overnight. It cannot put diesel into American trucks.
What a rate hike can do is raise mortgage rates, punish construction, discourage factory investment, squeeze small businesses, strengthen the dollar against American exporters, and eventually put Americans out of work.
That is not theory. It is the transmission mechanism of monetary policy.