Major US inflation data for November is expected to be released later today, and this data is expected to provide global markets insight into the present situation of consumer pricing and pressure on the Federal Reserve.
The data is consistent with a series of cautious statements made by Fed officials, suggesting that the Fed may soon begin to loosen monetary policy.
The first US interest rate reduction of this cycle is now expected to occur in March 2024, according to
the current odds.
Fed Statements
Interest rates have reached the proper tightening levels, as indicated by the Fed Chair Jerome Powell's statement on Friday. Despite this, Powell left open the possibility of additional policy tightening if necessary.
John Williams, the president of the New York Fed, stated on Thursday that interest rates have peaked and are now at the right levels to contain inflation.
Mary Dale, the president of the San Francisco Fed, stated that interest rates are currently well-positioned to contain inflation, but she emphasized that it is still too soon to discuss rate reductions.
Us Interest Rate
Currently, there is a 2% chance that the US will raise interest rates at the December Fed meeting.
There was a 50% chance of a 0.25% interest rate drop at the Fed meeting in March, and an 80% chance of one at the Fed meeting in May.
US Inflation Statistics
Investors will now be watching for significant US inflation data later today, which will be vital in revealing potential changes to US interest rates.
November's y/y increase in US consumer prices is predicted to be 3.1%, down from 3.2% in October.
Core prices are predicted to rise by 4.0%, as previously.
The US dollar
It goes without saying that unexpectedly high inflation data will strengthen the US dollar and delay the anticipated date of an interest rate reduction, and vice versa.
