The U.S. November CPI rebounded to 2.7%, raising concerns about sticky inflation, but the Federal Reserve's interest rate cut expectations remain unchanged

According to the Zhitong Finance APP, the U.S. Bureau of Labor Statistics released data on Wednesday showing that the U.S. unadjusted CPI for November rebounded further to 2.7% year-on-year, rising for the second consecutive month and reaching a four-month high. Although this data met market expectations, its growth rate has raised concerns about the progress of inflation suppression. Meanwhile, the core consumer price index (excluding food and energy costs) also rose by 0.3% for the fourth consecutive month, with a year-on-year increase of 3.3%. Although inflationary pressures have eased compared to the recovery peak during the pandemic, the recent stabilization, coupled with the gradual alleviation of concerns about the labor market, has led several Federal Reserve officials to advocate for a more gradual pace of interest rate cuts. Nevertheless, traders continue to bet that the Federal Reserve will cut rates next week. Specifically, the CPI report shows that the cost of goods excluding food and energy rose by 0.3%, the largest increase since May 2023, primarily driven by rising prices of new cars, used cars, and clothing. Grocery prices increased by 0.5%, the largest increase since early last year. Housing costs accounted for nearly 40% of the overall increase. These data indicate that although the year-on-year inflation growth rate has significantly slowed from the peak of 9.1% in June 2022, the process of bringing the inflation rate down to the Federal Reserve's 2% target has effectively stalled in recent months. In this regard, economists believe that the core CPI better reflects underlying inflation trends. Although the pressure of rising prices has decreased from previous peaks, the recent stability and improving labor market trends pose challenges for the Federal Reserve in pursuing its dual goals of keeping inflation close to 2% and maintaining a healthy labor market. As interest rates reach a more "neutral" level—high enough to suppress inflation but low enough to protect the labor market—Federal Reserve officials have discussed slowing the pace of interest rate cuts. They stated that if actions are taken too quickly, inflation may remain above the 2% target, but acting too slowly could lead to a sharp rise in unemployment. Despite the rise in inflation rates, the market generally expects the Federal Reserve to cut rates by 25 basis points for the third consecutive time next week. However, the pace of rate cuts next year remains uncertain. Analyst Anstey stated that today's CPI data is unlikely to change any outlook, although those who still believe the Federal Reserve will hold steady next week may reconsider, as inflation is not worse than expected. This seems to open the door for a 25 basis point rate cut in December. In terms of market reaction, after the U.S. CPI was released, the U.S. dollar index DXY fluctuated 20 points in the short term, reporting at 106.49; spot gold rose by 5 dollars in the short term, reporting at 2696.66 dollars/ounce