By Andreas Plecko
DOW JONES–The annual inflation rate in the USA increased slightly overall in December, while it fell slightly in the core calculation. As the US Department of Labor announced, consumer prices rose by 0.4 percent compared to the previous month and were 2.9 (previous month: 2.7) percent above the level in the same month last year. Economists surveyed by Dow Jones Newswires had expected a monthly price increase of 0.3 percent and an annual increase of 2.9 percent.
Core consumer prices (excluding energy and food) rose by 0.2 percent on a monthly basis and by 3.2 (previous month: 3.3) percent on an annual basis. The economists surveyed had expected a monthly rate of 0.3 percent and an annual rate of 3.3 percent.
The Fed has cut interest rates by 100 basis points since September, bringing them into a target range of 4.25 to 4.50 percent. Because the US labor market has been surprisingly strong recently, analysts now believe it is possible that the Fed will stop cutting interest rates – and perhaps even raise them this year.
Pricing in the interest rate futures market suggests a greater than 97 percent probability that the Fed will hold interest rates steady in January. In the latest “dot plot”, the council members have only planned two interest rate cuts of 25 basis points each for 2025, after there was talk of four interest rate cuts in September.
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(END) Dow Jones Newswires
January 15, 2025 08:36 ET (13:36 GMT)