Get Premium Data for Cyber Monday: Up to 55% Off InvestingProCLAIM SALE

Markets price in higher chance of Fed rate cut in December after in-line CPI data

Published 13-11-2024, 07:44 pm
© Reuters
NDX
-
US500
-
DJI
-
US10YT=X
-
VIX
-

Following today's inflation data, traders of short-term interest-rate futures contracts adjusted their expectations to now see a heightened probability of an additional quarter-point interest rate cut by the Federal Reserve in its December meeting.

The likelihood of a Fed rate cut to the 4.25%-4.5% range in December has increased to 80%, a significant rise from the roughly 60% chance priced in prior to the inflation data release.

Furthermore, traders anticipate a deceleration in the pace of rate reductions for the following year, with expectations that the Fed will pause rate cuts once the policy rate reaches the 3.75%-4% range.

The U.S. Labor Department's data indicated a slight acceleration in headline inflation for October, an outcome that was anticipated and is expected to be scrutinized by the Federal Reserve as it approaches its next policy meeting.

The consumer price index (CPI), a critical indicator of price movements in the world's largest economy, climbed by 2.6% year-over-year in October, a slight increase from 2.4% in September. On a month-to-month basis, the CPI rose by 0.2%, consistent with the previous month's increase.

Excluding the more volatile components such as food and energy, the "core" CPI measure saw a 3.3% increase from the previous year and a 0.3% rise month-over-month, mirroring the figures recorded in September.

The Federal Reserve's most recent action, last week, involved a widely expected cut in borrowing costs by 25 basis points, bringing the rate to a range of 4.50% to 4.75%.

The central bank acknowledged that inflation remains "somewhat elevated," but it assessed that the risks to maintaining stable price growth and a robust employment market were "roughly in balance."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.