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US inflation rose to 2.7 per cent in November, as the Federal Reserve weighs how quickly to proceed with interest rate cuts.
This number was in line with the expectations of economists surveyed by Bloomberg, but it was higher than the October rate of 2.6 percent.
Data released by the Bureau of Labor Statistics on Wednesday confirm concerns about flat inflation after the previous increase in October.
Next week, the Fed is widely expected to cut interest rates for the third time in a row by a quarter of a percentage point, but the path next year is less certain, as the central bank grapples with its dual mandate to keep inflation near 2 percent and maintain a healthy level. . Labor market.
“The Fed will likely move to the sidelines after December,” said Ajay Rajadhyaksha, global head of research at Barclays, noting that with the expected cut next week, the central bank will have cut borrowing costs by 100 basis points.
“That could change quickly if the labor market gets out of bed — but so far there is not much evidence of that,” he added.
Market prices after Wednesday's data indicated that investors were still betting on a quarter-point Fed cut next week, which would take interest rates to a new target range of 4.25 to 4.5 percent.
In government bond markets, the policy-sensitive two-year Treasury yield fell 0.04 percentage point to 4.11 percent, indicating a slight rise in prices.
US stock futures extended their gains after the numbers were published. Contracts tracking the Standard & Poor's 500 index rose 0.5 percent, while contracts tracking the technology-rich Nasdaq 100 index rose 0.8 percent.
Wednesday's data showed that prices rose on a monthly basis by 0.3 percent in November.
Once food and energy prices are excluded, the core CPI rose 0.3 percent during the month, or 3.3 percent year-over-year.
Fed officials have discussed slowing the pace of cuts as interest rates reach a more “neutral” position, high enough to keep inflation in check but low enough to protect the labor market.
They argue that if they cut interest rates too quickly, inflation could remain above their 2 percent target, but moving too slowly could risk a sharp rise in the unemployment rate. Last week, Chairman Jay Powell also noted that a strong economy means the central bank can “be more cautious” about interest rate cuts.
The latest jobs report also showed job growth rebounded sharply in November after being hit by hurricanes and strikes the previous month.
However, the unemployment rate rose to 4.2 percent, suggesting that the labor market acceleration was not strong enough to risk reigniting inflation.
Some officials in the outgoing Biden administration have expressed concern that President-elect Donald Trump's policies will hurt the economy after he returns to the White House next month.
US Treasury Secretary Janet Yellen said this week that the sweeping tariffs proposed by Trump could “hinder” progress in taming inflation.
“(Tariffs) will have a negative impact on the competitiveness of some sectors of the U.S. economy, and could significantly raise costs for households,” she said at an event hosted by The Wall Street Journal.
