Inflation slows again in November, but stubborn core supports Fed rate caution
The Fed's 'higher for longer' interest-rate stance received support from the November inflation report.
Updated at 8:48 AM EST
U.S. inflation pressures slowed again in November, but core price pressures held steady for a second month, potentially enabling the Federal Reserve to maintain its 'higher-for-longer' interest-rate stance well into 2024.
The headline consumer price index for November was pegged by the Commerce Department at 3.1%, slowing modestly from the prior month's tally of 3.2% and matching Wall Street's consensus forecast. The figure was powered largely by falling oil and energy prices and a near 8% slide in domestic gasoline.
On a monthly basis, inflation edged 0.1% higher, compared with unchanged readings in October and September and the 0.6% gain tallied in August.
So-called core inflation, which strips out volatile components like food and energy, held at 4%, the lowest in two years, while the monthly reading of 0.3% also matched Wall Street forecasts.
U.S. stocks extended modest gains following the data release with futures contracts tied to the S&P 500 indicating a 2 point opening-bell gain while those tied to the Dow Jones Industrial Average suggested a 75 point advance. The tech-focused Nasdaq was called 30 points higher.
CPI’s categories: pic.twitter.com/etD7tkhINI— Liz Ann Sonders (@LizAnnSonders) December 12, 2023
Benchmark 10-year Treasury note yields edged 3 basis points higher following the data release to change hands at 4.224% while 2-year notes were pegged at 4.705%, 4 basis points higher from prior to the data release.
The U.S. dollar index, which tracks the greenback against a basket of its global peers, was marked 0.35% lower at 103.726
CME Group's FedWatch has long discounted the chances of a Fed rate move later this week in Washington, but pegs the chances of a quarter-point cut in March at around 47.4%.
Bets on a May reduction, meanwhile, leaped to 82.2% from just 33% only a month ago.
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