U.S. inflation rose for the second straight month in November, rising from the pace set the previous month, as the Federal Reserve weighs how quickly to cut interest rates.
The consumer price index rose 2.7% last month from a year earlier, higher than October's 2.6% rise but in line with expectations, the Labor Department said Wednesday.
Month-on-month, the CPI rose 0.3%, beating economists' expectations for a 0.2% rise.
Core inflation, which excludes volatile energy and food prices, rose 3.3% in November from a year earlier.
Compared to the previous month, the core inflation rate increased by 0.3%, consistent with the previous month.
“The rise in inflation is not enough to ruin Christmas,” Chris Zaccarelli, chief investment officer at Northlight Asset Management, said in a note.
“Despite the fact that the headline CPI was consistently above 3% at the beginning of the year, it is now consistently below 3%, so there is some noise from month to month. “We think the Fed will likely “weave through these fluctuations and continue on an accommodative path,'' he added.
Interest rates are currently set at about 4.6%, above the 2.9% “neutral” rate that officials believe will help keep the economy growing at a steady pace.
While policymakers generally agree on the need to lower interest rates, there are questions about how quickly they should do so.
Most investors expect the Fed to make a third rate cut at its Dec. 17-18 meeting, but Fed Chairman Jerome Powell has recently signaled a cautious approach going forward.
“We can afford to be a little more cautious as we strive for neutrality,” Powell said at a New York Times event last week.
And at a press conference in November, he said, “The real question is whether it's December…By December, we'll have more data.”
Following the inflation report, investors' odds of a quarter-point rate cut rose to 99.9% from 86.1% on Wednesday morning. According to CME FedWatch.
Inflation has cooled significantly from its pandemic-induced peak of 9% in 2022, but authorities are aiming to hit the 2% target.
Inflation remains above 2%, but the central bank slashed its key lending rate by half a percentage point in September and cut it by a quarter again in November following President-elect Donald Trump's victory. Points reduced.
Stock market futures were flat on the inflation report, but the 10-year Treasury yield rose about 0.02 percentage point.
