US inflation reached 2.7% in November

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U.S. inflation hit 2.7 percent last month, matching Wall Street forecasts and paving the way for a planned Federal Reserve rate cut next week.

Wednesday's data from the Bureau of Labor Statistics was in line with the expectations of economists surveyed by Bloomberg. But it was higher than the 2.6 percent rate recorded in October, which itself marked an increase from the previous month.

Market prices indicate that investors now give a 98 percent chance of a quarter-point rate cut in December, up from less than 90 percent before the latest inflation figures were released.

Brian Levitt, global markets strategist at Invesco, said the numbers were well within the federal government's comfort and support zone.[ed] a rate cut at the next meeting. A quarter-point cut next week would bring interest rates back to a new target range of 4.25 to 4.5 percent.

Next year's trajectory is less certain as the central bank grapples with its dual mandate of keeping inflation near 2 percent and maintaining a healthy labor market.

Referring to President-elect Donald Trump, who will succeed President Joe Biden in January, David Kelly, chief global strategist at JPMorgan Asset Management, said: If the Fed doesn't cut rates next week… I think you will receive an upcoming tweet. saying: Why don't they cut? They cut for the old guy.

But Kelly said a January rate cut was unlikely and the Fed now had an opportunity to quietly set a more moderate rate cut path in 2025.

U.S. stocks rose Wednesday, with the benchmark S&P 500 adding 0.9 percent and the tech-heavy Nasdaq Composite jumping 1.7 percent. In government bond markets, the policy-sensitive two-year Treasury yield, which moves inversely to price, was 0.03 percentage points lower at 4.12 percent.

Data on Wednesday showed that on a monthly basis, headline inflation and core inflation, excluding food and energy prices, rose 0.3 percent in November. On an annual basis, core inflation increased by 3.3 percent.

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Most of the monthly price increase was due to a 0.3 percent increase in the housing index, which tracks housing-related costs. But other indicators suggest those costs have declined, given that the housing index lags other data by nine months to a year.

Once housing, food and energy prices are excluded, services inflation rose 0.2 percent for the month, compared to 0.3 percent in October.

Fed officials have discussed slowing the pace of cuts as rates reach a more neutral level, high enough to contain inflation but low enough to safeguard the labor market.

They argue that if they cut rates too quickly, inflation could stay above their 2 percent target, but that action too slowly could cause the unemployment rate to rise sharply.

Last week, Chairman Jay Powell suggested that a strong economy meant the central bank could afford to be a little more cautious about rate cuts.

Some officials in the outgoing Biden administration have expressed concern that 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 Trump's proposed sweeping tariffs could derail progress in controlling inflation.

[Tariffs] This would negatively impact the competitiveness of some sectors of the U.S. economy and could significantly increase costs for households, she said.

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