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US inflation climbed to 2.7 percent in November, as the Federal Reserve contemplates the pace at which to move forward with reducing interest rates.
The number aligned with the forecasts of economists surveyed by Bloomberg but was higher than October’s rate of 2.6 percent.
The information from the Bureau of Labor Statistics on Wednesday highlights worries about persistent inflation following a previous uptick in October.
The Fed is widely anticipated to announce its third consecutive quarter-point cut to interest rates next week, but the path for next year is uncertain as the central bank grapples with its dual mandate to maintain inflation near 2 percent and sustain a robust labor market.
Prices increased by 0.3 percent on a monthly basis.
Excluding food and energy prices, core CPI rose by 0.3 percent for the month, or 3.3 percent annually.
US stock futures slightly extended their gains after the data release. Contracts monitoring the benchmark S&P 500 index were up by 0.3 percent, while those tracking the technology-heavy Nasdaq 100 index rose by 0.4 percent.
Government bonds remained stable, with the policy-sensitive two-year Treasury yield holding steady at 4.15 percent.
Market expectations on Wednesday indicated that investors were still betting on a quarter-point cut by the Fed next week, which would bring interest rates to a new target range of 4.25-4.5 percent.
Officials have debated slowing the pace of cuts as rates approach a more “neutral” level that is high enough to control inflation but low enough to safeguard the labor market.
They argue that moving too quickly could lead to inflation remaining above their 2 percent target, while moving too slowly could risk a sharp increase in the unemployment rate.
Jobs growth rebounded significantly in November after being dragged down by hurricanes and strikes the previous month.
However, the unemployment rate increased to 4.2 percent, indicating that the labor market’s recovery was not robust enough to risk reigniting inflation.
Economists note that while price pressures persist in service sectors related to housing, they are expected to stabilize over time.
Some officials in the outgoing Biden administration have expressed concerns that president-elect Donald Trump’s policies will harm the economy once he returns to the White House next month.
US Treasury Secretary Janet Yellen stated this week that the extensive tariffs proposed by Trump could disrupt progress in controlling inflation.
“[Tariffs] would negatively impact the competitiveness of certain sectors of the US economy and could significantly raise costs for households,” she mentioned at an event organized by the Wall Street Journal.