Consumer prices rose at a quicker annual rate in November, which highlights the ongoing challenge of inflation for both policymakers alike and families. As per the Bureau of Labor Statistics, the consumer price index has recorded a 12-month inflation rate of 2.7%.
Soon after this, a monthly increase of 0.3%, this annual figure marked a 0.1 percentage point rise as compared to October. When excluding food and energy prices, the core CPI stood at 3.3% year-over-year and also rose to 0.3% from the previous month.
As for the core reading, it remained steady from the prior month. These figures are aligned with the expectations which are set by Dow Jones analysts. The officials of the Federal Reserve prepare for the upcoming policy meeting next week, these numbers add weight to the deliberations.
Market predictions strongly suggest that the Fed will reduce its benchmark short-term borrowing rate by a quarter percentage point when the meeting concludes by the 18th of December.
Although they may hold off on further cuts in January to assess the effects of the earlier reductions on the economy. As per the CME Group’s FedWatch tool, the report bolstered market expectation for a rate cut with the traders increasing the likelihood to 99%.
The chances of a January cut also rose slightly and reached around 23%. While the inflation has significantly decreased the 40-mark peak observed in mid-2022 it still exceeds the Fed’s annual target of 2%.
Recently, some policymakers have voiced their concerns over the stubbornness of inflation, it has also suggested that the pace of rate cuts might need to be moderated if the substantial process isn’t achieved.
If the Fed proceeds with a reduction next week, it would mark a decrease of one percentage point in the federal funds rate since September.
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