Inflation data stabilized, the Federal Reserve may cut interest rates again in December

On November 13, the Wall Street Journal commented on the U.S. CPI data, noting that despite the stabilization of inflation data, Fed policymakers now still seem likely to cut interest rates by another 25 basis points when they hold their final meeting of the year next month. This is firstly because, despite stumbling along the way, inflation still appears to be on a cooling trend. In addition, there is still a certain degree of “catch-up inflation” in the data. Fed officials also believe that the current level of short-term interest rates is restrictive, which means that without further rate cuts, the job market may cool further than they expect, and even put the economy at risk of recession. That said, the U.S. Labor Department will release its next consumer inflation report on Dec. 11, a week ahead of the Fed meeting. If the data is much firmer than Fed officials hope, they may choose to pause further rate cuts for now. That would be especially true if the November jobs report, scheduled for Dec. 6, shows a rebound in employment, thus confirming that last month's slowdown was merely a reflection of hurricane- and strike-related problems.