US inflation rose in November at the pace set a month earlier – rising for the second consecutive month – as the Federal Reserve considers how soon to move to cut interest rates.
The Labor Department said Wednesday the consumer price index rose 2.7% last month from a year earlier — up from the 2.6% rise seen in October, but falling in line with expectations.
Month-on-month, the CPI rose 0.3%, better than economists’ expectations of 0.2%.
Core inflation, which excludes volatile energy and food prices, rose 3.3% in November from a year earlier.
Month-on-month, core inflation rose 0.3% – in line with a month earlier.
Interest rates are currently set at around 4.6%, which is above the 2.9% “neutral” rate that officials believe will help keep the economy growing at a steady pace.
While policymakers largely agree that rates need to be reduced, there is doubt over how quickly they should be cut.
Investors broadly expect the Federal Reserve to cut interest rates for a third round during its Dec. 17-18 meeting, although Fed Chairman Jerome Powell has recently signaled caution going forward.
“As we try to find neutral, we can be a little more cautious,” Powell said at a New York Times event last week.
And during a press conference in November he said: “Really the question is – December is…by December, we’ll have more data.”
Investors currently see an 86.1% chance that the Fed will cut rates by a quarter point during its meeting next week, up from last month’s probability. According to CME Fedwatch,
Inflation has declined significantly since a pandemic-hit peak of 9% in 2022, but officials are aiming to meet their 2% target.
Although inflation remains above 2%, the central bank has cut its key lending rate by one percentage point increased by half a point in September and then by a quarter point In November, following the victory of President-elect Donald Trump.
Stock market futures were flat after the inflation report, while 10-year Treasury yields rose about 0.02 percentage points.
