The News
US inflation rose in November, new Labor Department data shows, indicating a recent period of steady cooling may be coming to an end. The consumer price index, a measure of the cost of goods and services, ticked up 0.3% in the last month — its highest monthly increase since April.
The data brings the 12-month trailing inflation rate to 2.7%, which is in line with economists’ expectations; excluding food and gas, top line inflation remained steady at 3.3%.
The report marks the last major data dump the US Federal Reserve will take into account ahead of its meeting next week, when it is expected to cut the cost of borrowing money for the third time this year.
SIGNALS
Pressure mounts ahead of Trump taking office
Before Donald Trump won the election, US central bankers were confident they had shepherded the economy to a soft landing. Trump’s pledges to increase import duties and deport migrant workers would send prices soaring, experts have said. While the latest uptick in inflation isn’t the herald of doomsday, it does suggest the Fed’s fight against inflation isn’t over. “Price pressures are hardly settling at a level that the Fed can be completely at ease with,” a chief global strategist said in a note to clients Wednesday. “The Fed will be concerned by the very stubborn nature of inflation and will be increasingly cautious about the upside inflation risks that President-Elect Trump’s policies may bring.”
December’s rate cut is a fairly certain bet, but road ahead is murkier
While topline inflation increased in November, it won’t derail the central bank from cutting interest rates this month, economists told The New York Times. The near-unanimous expectation is that the central bank will cut the federal funds rate by 25 basis points at next week’s meeting, according to CME’s FedWatch markets tracker. But there is far less consensus among investors and economists as to the Fed’s road ahead for 2025, with many still predicting a pause in cuts for January, before adopting an every-other-meeting approach throughout early 2025.