Employment cost index increases 1.1 in third quarter
Wages, salaries rise 1.2; benefits advance 0.9
Consumer confidence softens further in October
House price inflation accelerates in September

WASHINGTON, Oct 31 Reuters U.S. labor costs increased solidly in the third quarter amid strong wage growth while house price inflation accelerated in August, the latest signs that the Federal Reserve could keep interest rates high for some time.

The reports on Tuesday pose a threat to efforts by the U.S. central bank to bring inflation to its 2 target. Fed officials started a twoday policy meeting on Tuesday. The U.S. central bank is expected to leave interest rates unchanged but maintain its hawkish bias at the conclusion of that meeting as a recent spike in U.S. Treasury yields and stock market selloff have tightened financial conditions.

Those wage increases are likely to keep inflation running above target while higher house prices could lead to a pickup in shelter inflation, said Andrew Hollenhorst, chief U.S. economist at Citigroup in New York. For now the Fed will remain onhold, but the evident upside risk to inflation means Chair Jerome Powell and committee will keep potential further rate hikes on the table.

The Employment Cost Index ECI, the broadest measure of labor costs, rose 1.1 last quarter after increasing 1.0 in the AprilJune period, the Labor Department39;s Bureau of Labor Statistics reported. Economists polled by Reuters had forecast the ECI would rise…