In-line Nov US CPI rise leaves door open for Dec ease
2024.12.11 09:17
(Reuters) – U.S. consumer prices increased by the most in seven months in November, but that is unlikely to discourage the Federal Reserve from cutting interest rates for a third time next week against the backdrop of a cooling labor market.
The consumer price index rose 0.3% last month, the largest gain since April after advancing 0.2% for four straight months, the Labor Department said on Wednesday. In the 12 months through November, the CPI climbed 2.7% after increasing 2.6% in October.
Economists polled by Reuters had forecast the CPI rising 0.3% and advancing 2.7% year-on-year.
MARKET REACTION:
STOCKS: U.S. stock index futures extended a slight gain to +0.38%, pointing to a firm open on Wall Street BONDS: The fell to 4.222% and the two-year yield fell to 4.124%FOREX: The pared a gain to +0.02% and the euro turned 0.1% positive
COMMENTS:
BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN
“There’s nothing to see here, move along folks. Everything came in line with expectations. Shelter costs are still the main driver of inflation. With the payrolls report behind us and now the inflation report behind us, there’s nothing stopping the Fed from cutting 25 bps next week. The excitement will all be in the summary of economic projections. It will likely show four cuts in 2025 and inflation eventually simmering down to target.”
JOSH HIRT, SENIOR U.S. ECONOMIST, VANGUARD (via email)
“The CPI print confirms the market consensus of another 25bps rate cut from the Federal Reserve. We are still closely monitoring the strength of the labor market and potential stickiness of certain components of inflation (shelter, services) heading into 2025.”
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK
“The report was in line with expectations. It does show that the inflation fight has hit a speed bump, but I don’t think that these numbers derail the Fed from cutting next week by 25 basis points next week.”
“Inflation remains sticky, so it’s not all that positive, but not all that negative. I would say this is a neutral report and the markets are likely to act accordingly.”
“Looking forward, I think after this, the Fed may pause (its rate cuts) in the first quarter of 2025 based on two things, sticky inflation and the prospects of Mr. Trump’s economic program regarding the tariffs.”
“This is the last cut that we’re going to see until the second quarter.”
