Investors will do that this morning. e are closely monitoring a major inflation report that will shape future monetary policy.
The Federal Reserve’s favorite inflation gauge, the core Personal Consumption Expenditures (PCE) index, which excludes volatile food and energy costs, is expected to rise 0.2% month-on-month in November after the prices rose 0.3% in October, Bloomberg data show. .
Wall Street expects core prices to rise 2.9% over the past year, ahead of October’s 2.8% gain.
Overall PCE is expected to rise 2.5% year-over-year, an acceleration from October’s annual increase of 2.3%.
The report, published at 8:30 a.m. Dutch time, comes after the central bank cut interest rates by 25 basis points at its last policy meeting of the year on Wednesday. Officials also indicated that there would be less easing in 2025, with long-term inflation expected to remain high.
Earlier this month, the core consumer price index (CPI), which excludes the more volatile costs of food and gas, saw prices rise 3.3% in November for the fourth month in a row compared to last year.
Meanwhile, the core producer price index (PPI), which tracks the price changes seen by businesses, showed prices rose 3.4% annually in November. That’s more than an increase of 3.1% in October and also higher than economists’ expectations of a 3.2% increase.
At a news conference after Wednesday’s interest rate decision, Federal Reserve Chairman Jerome Powell indicated that the latest phase of the Fed’s battle to curb inflation has proven to be more challenging than central bank leaders initially expected.
“We had a year-end inflation projection, but that’s falling apart as we approach the end of the year,” Powell said. “I can tell you that this is perhaps the biggest factor: inflation has once again underperformed expectations.”
