Inflation ticked up in November as expected
In November, inflation sped up once again.
The consumer price index increased 2.7% from a year ago as expected, higher than October’s 2.6% rate and the highest reading since July, when the rate was 2.9%.
Matt Colyar, an economist at Moody’s Analytics, told B-17 before the new data was published that an acceleration wouldn’t be concerning because November’s increase would likely be because of housing inflation. Shelter inflation has mainly been cooling from its large peak of over 8% in March last year but is still high compared to the pre-pandemic rate.
“If inflation were to accelerate because prices for cyclical, demand-driven things like hotels, vehicles, airfare, etc. jumped, then policymakers at the Federal Reserve will start to look at the US economy with a bit more caution,” Colyar said. “That shouldn’t be overstated, however. It takes more than one monthly data point to be a trend and we haven’t yet seen that kind of dynamic emerging.”
Members of the Federal Open Market Committee will meet once more this year next week on December 17 and 18 and will likely announce another interest-rate cut. Expectations for a 25 basis point cut climbed after the release of the jobs report on Friday, which showed a higher-than-expected monthly job gain. The unemployment rate also rose to 4.2% in November, matching expectations.
Cory Stahle, an economist at the Indeed Hiring Lab, told B-17 following the jobs report that “there are still many reasons to be optimistic about the labor market,” like the layoff rate being less than the pre-pandemic low. However, Stahle added, “As a Federal Reserve policymaker, you don’t want to wait until things start looking bad to react to that because then by then you might be too late.”
CME FedWatch showed after the new inflation data was published traders expected a nearly 100% chance of an interest rate cut of 25 basis points next week, up from a nearly 90% chance before the report.
This is a developing story. Please check back for updates.
