Investing.com – Consumer price inflation (CPI), on an annualized basis, rose as expected in November, although the core data unexpectedly eased, complicating the Federal Reserve’s plans to move ahead with gradual rate hikes, official data showed on Wednesday.
In a report, the U.S. Commerce Department said that consumer prices rose 0.4% in November from a month earlier, in line with forecasts and compared a 0.1% gain in the previous month.
Year-over-year, consumer prices increased 2.2% last month, matching expectations and strengthening from the 2.0% advance seen in October.
Furthermore, core CPI also dropped to an annualized rate of 1.7% in November, missing forecasts that it would repeat the prior month’s reading of a 1.8% rise.
Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. The central bank usually tries to aim for 2% core inflation or less.
Despite the data, the U.S. central bank is widely expected to raise the Fed funds target range by a quarter point at 2:00PM ET (19:00GMT) Wednesday as it moves forward with plans to gradually tighten policy.
According to Investing.com’s Fed Rate Monitor Tool, Fed fund futures fully price in the increase to a range between 1.25%-1.50%.
Therefore, markets will play close to attention to Fed chair Janet Yellen’s press conference 30 minutes after the release of the policy statement, as investors look for fresh clues on the likely trajectory of monetary policy in the months ahead.
Furthermore, along with its latest forecasts for economic growth, the Fed will also release its projections for interest rates, known as the "dot-plot". Last time, the Fed had forecast three rate rises for next year and is expected to keep its outlook about the same even though the market has been skeptical it will hike as much as it foresees.
After the report, EUR/USD was trading at 1.1759 from around 1.1730 ahead of the release of the data, GBP/USD was at 1.3355, compared to 1.3326 previously, while USD/JPY was at 112.99 from 113.34 earlier.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 93.83, compared to 94.07 ahead of the report.
Meanwhile, U.S. stock futures pointed to a slightly higher open. The Dow futures inched up 16 points or 0.07%, the S&P 500 futures advanced 2 points, or 0.08%, while the Nasdaq 100 futures rose 21 points, or 0.32%.
Elsewhere, in the commodities market, gold futures traded at $1,249.00 a troy ounce, compared to $1,243.30 ahead of the data, while crude oil traded at $57.72, compared to $57.69 prior to the release.