The Fed's rate cut is a foregone conclusion, and CPI data may not shake the policy outlook
Pepperstone senior research strategist Michael Brown pointed out in a report that the US November CPI data to be released tonight will have limited impact on the Fed's recent policies. The market generally believes that the Fed's 25 basis point rate cut next week is almost a foregone conclusion, and the labor market rather than inflationary pressure will dominate the direction of policy adjustments.
According to economists surveyed by the Wall Street Journal, the annual CPI growth rate in November will rise from 2.6% in October to 2.7%, while the core CPI annual growth rate is expected to remain unchanged at 3.3%. These data may reflect slight inflationary pressures, but in the current policy environment, the market is no longer overreacting to inflation data in the short term.
The market's expectations have fully priced in the rate cut. The next key is the changes in the labor market. Paying attention to subsequent employment data can reveal the Fed's next move!