On Wednesday, the USA's November CPI largely met economists' expectations. The data highlights concerns about sticky inflation following the rise in inflation in October.

The USA's unadjusted core CPI year-on-year for November recorded 3.3% for the third consecutive month, in line with expectations; the monthly rate was 0.3%, also in line with expectations and unchanged from the previous value. The unadjusted CPI year-on-year for November recorded 2.7%, which is an increase from the previous value of 2.6% as expected, marking the second consecutive month of increase, reaching a four-month high; the monthly rate recorded 0.3%, an increase from the previous value of 0.2% as expected, the highest level since April.

After the USA CPI was released, traders increased their bets on a rate cut by the Federal Reserve in December.

In addition, according to foreign media reports, after the CPI report was released, swap traders intensified their bets on a rate cut by the Federal Reserve before the end of 2025. They now expect the cumulative rate cut to reach 87 basis points by then, which means the Federal Reserve will likely cut rates by 25 basis points next week; two more cuts are expected in 2025, each by 25 basis points, which is fewer than the four cuts mentioned by Federal Reserve officials in the latest quarterly dot plot from September.

In detail, the month-on-month increase in housing inflation for November fell to 0.3%, with the Owner's Equivalent Rent (OER) increasing by only 0.2% month-on-month, which can be seen as a long-awaited signal of the upcoming housing anti-inflation. However, for the same reason, this also means that the inflation in the super core service sector remains quite strong.

Overall, Analyst Anstey stated that today's CPI data is unlikely to change anyone's outlook, but those who still believe the Federal Reserve will stand pat next week may reconsider, as inflation is not worse than expected. This seems to open the door for a 25 basis point rate cut on December 18.

It is widely expected that the Federal Reserve will cut rates by 25 basis points for the third consecutive time next week, but the pace of rate cuts next year is less certain, as the Federal Reserve is striving to maintain inflation near 2% while sustaining 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, officials have discussed slowing the pace of rate cuts. They state that if actions are too rapid, inflation may remain above the 2% target, but if actions are too slow, it could lead to a sharp rise in unemployment.

Although the inflation rate in the USA is much lower than the 40-year high in mid-2022, it is still above the Federal Reserve's target of 2%. In recent days, some policymakers have expressed disappointment at the persistence of inflation and stated that if more progress is not made, it may be necessary to slow the pace of interest rate cuts.

Goldman Sachs Analyst Whitney Watson stated that today's CPI data has cleared the hurdles for next week's interest rate cut. Following the release of today's data, the Federal Reserve will enter a 'quiet period,' and they still have confidence in the anti-inflation process. It is believed that in the new year, the Federal Reserve will continue to gradually loosen MMF policy.

Analyst Michael Brown from Pepperstone also believes that CPI data should not prevent the FOMC from cutting rates by 25 basis points next Wednesday. However, he did express concerns about inflation risks for next year. He said:

"However, the risks around the monetary policy outlook will become increasingly two-sided in the first quarter of next year. Mainly, policymakers will be concerned about the potential upward inflation risk brought by the tariff plans of the incoming President Trump, as well as the broader re-inflationary fiscal stance, which could trigger strong demand and further exacerbate price pressures."

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