U.S. inflation data offered the strongest evidence yet that price pressures have peaked, cheering financial markets and putting a pause from the Federal Reserve’s interest-rate hikes in view.
Stocks and bonds rallied after the report as investors boosted bets that the Fed will pause its tightening cycle early next year. So-called core inflation — which excludes food and energy — rose just 0.2% in November, the smallest monthly advance since August 2021.
However, with annual headline inflation still running above 7%, it’s far too soon for the Fed to let off the gas on its rapid ascent in interest rates. Policymakers are widely expected to downshift to a 50-basis point hike Wednesday, but Chair Jerome Powell will likely communicate that rates will need to remain restrictive well into next year to further cool prices and get inflation back to target.
