The Federal Reserve's preferred measure of underlying inflation showed signs of easing in November, providing hope for policymakers aiming to cut interest rates further by 2025. The Bureau of Economic Analysis reported a 0.1% increase in the core Personal Consumption Expenditures (PCE) price index, excluding food and energy, with an annual rise of 2.8%. This monthly increase marks the lowest since May.
The data may alleviate some inflation concerns among Fed officials, who recently projected higher price and interest rate paths for 2025, causing a stock market dip as investors anticipated tighter policies. Following the data release, U.S. Treasury yields and the dollar fell, while stock index futures regained some ground. Traders expect fewer than two 25-basis-point rate cuts next year.
Price details revealed a broad slowdown across sectors, with core services prices rising 0.2% and core goods prices, excluding food and energy, decreasing for the first time in three months. Consumer spending grew by 0.4%, and personal income increased by 0.3%, indicating consumer resilience during the holiday shopping season.
