The November US CPI report revealed disinflationary progress stalling, yet expectations for a 25bp rate cut at the FOMC's final meeting remain unaffected.
Core prices rose 3.3% Year-over-Year for the third consecutive month, while headline inflation increased by 2.7% YoY, showing a potential stall in disinflation.
The FOMC’s policies are now influenced more by the labor market than previous disinflation trends, which may lead to varied outcomes in upcoming meetings.
Slower policy normalization moving towards a neutral rate of around 3% suggests less aggressive measures compared to 2024, with inflation risks complicating the outlook.
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