Prices barely changed in November according to the Commerce Department, with the personal consumption expenditures price index only increasing by 0.1% from October. Despite this, the inflation rate from a year ago was still at 2.4%, higher than the Federal Reserve’s target of 2%. The core PCE, excluding food and energy, also increased by 0.1% monthly and was up 2.8% from a year ago. Goods prices remained mostly unchanged, while services saw a 0.2% increase in prices. Food and energy prices both rose by 0.2%, though on a 12-month basis, goods prices fell while services prices rose significantly.
The report also showed that personal income rose by 0.3% in November, falling short of expectations, while personal expenditures increased by 0.4%, slightly below forecast. The personal saving rate edged lower to 4.4%. The stock market futures reacted negatively to the report, along with a decrease in Treasury yields.
The report comes after the Fed cut its benchmark interest rate to 4.25%-4.5%, the lowest in two years, and reduced their expected rate cuts for 2025. Chair Jerome Powell mentioned that inflation is moving closer to the Fed’s goal, leading to the slower projected path for rate cuts. Powell compared the decision to drive slowly on a foggy night or walking into a dark room filled with furniture, emphasizing the need for cautious decision-making in uncertain times.
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