Fed Faces Economic Crossroads Amid Inflation and Rate Cuts

Consumer prices in the U.S. surged in November, though signs of moderating inflation in certain areas offered a glimmer of hope. The Federal Reserve is poised to implement yet another interest rate cut. The CPI report demonstrated that inflation remains problematic, but services and housing costs showed some improvement.

The latest data reveals that U.S. consumer prices experienced their most significant increase in seven months during November, sparking concerns about stalled progress towards the central bank's inflation target of 2%.

Notably, rental and insurance cost increases have decelerated, slightly easing service inflation. Despite these signs of relief, potential tariffs from the approaching Trump administration could disrupt this stabilization.

The Federal Reserve is expected to announce a third consecutive rate cut to aid a cooling labor market, with plans for additional cuts in 2025 now anticipated to be fewer than previously projected.

(With inputs from agencies.)