US November CPI rises 2.7% YoY, meets expectations... "Rate cut as planned"

Core CPI excluding energy rises 3.3%

This month's base rate likely to drop by 0.25%P

The U.S. Department of Labor announced on the 11th that the Consumer Price Index (CPI) for November rose 2.7% year-on-year and 0.3% month-on-month. This is in line with the expert estimates (2.7%) compiled by Dow Jones. The core CPI, excluding the volatile food and energy sectors, rose 3.3% from a year ago, staying within estimates. Energy prices rose 0.2% from the previous month but fell 3.2% from the same month last year. Food prices increased by 0.4% from the previous month and rose 2.4% from the same month last year.

Housing costs rose 0.3% month-on-month, accounting for about 40% of the monthly itemized price increase. The U.S. Department of Labor explained, "Housing and food were the main drivers of the increase." Additionally, auto insurance premiums rose 12.7% from a year ago, education costs increased by 4.2%, and medical expenses rose by 3.1%.

This announcement has increased the likelihood that the Federal Reserve (Fed) will cut the base rate by 0.25 percentage points at the Federal Open Market Committee (FOMC) meeting on the 17th-18th. Although the trend of easing inflation has halted, it is not enough to hinder a rate cut. Neil Burrell, Chief Investment Officer (CIO) at Premier Miton Investors, told Bloomberg, "This announcement will give the Fed confidence and add certainty to investors' short-term decision-making."

According to the Chicago Mercantile Exchange (CME) FedWatch, within 30 minutes of the Labor Department's announcement, the probability of the Fed cutting rates by 0.25 percentage points at this month's FOMC surged to 96.4% in the interest rate futures market. This is up from 78.1% a week ago. The yield on the 2-year U.S. Treasury note also plummeted from 4.176% just before the announcement to 4.120% afterward.

Reporter Hyunil Lee hiuneal@hankyung.com