November CPI inflation data meets forecasts, cementing Fed rate cut bets

Published On Dec 11, 2024, 8:49 AM

The November Consumer Price Index (CPI) data showed a 2.7% annual increase in consumer prices, closely matching economic forecasts. This slight increase from October's 2.6% has led to heightened expectations that the Federal Reserve will lower interest rates in December. Core inflation, which excludes food and gas prices, remained at 3.3% over the year, raising concerns over persistent inflation from categories like shelter and used car prices. The market is now anticipating a more than 97% chance of a 25 basis point rate cut by the Fed, influenced further by potential inflationary policies expected under the new presidential administration.

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The continued signs of inflation meeting expectations suggest that the Federal Reserve is likely to maintain or even accelerate its accommodative monetary policies, including interest rate cuts. Investors may see this as a positive sign for certain sectors, particularly those sensitive to interest rates such as real estate and utility stocks, which typically thrive in lower rate environments.

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