- Annual inflation rose to 3.4 percent in December, above analysts’ forecasts
- Experts had predicted that inflation would rise slightly to 3.2 percent
- The news has raised fears that the Federal Reserve could avert interest rate cuts this year
Inflation rose to 3.4 percent in December – above economists’ forecasts – raising fears that the Federal Reserve could avert rate hikes this year.
It’s up from 3.2 percent in November and remains well above the Fed’s 2 percent target.
Prices were driven up by housing, which accounted for more than half of the monthly cost increase, the Labor Department said.
Economists had forecast annual inflation to rise slightly to 3.2 percent in December, up from 3.1 percent the month before.
Inflation needs to cool to pave the way for rate cuts this year after the Fed raised rates to a 22-year high of between 5.25 and 5.5 percent.
Inflation rose to XX% in December, raising fears the Fed could avert rate hikes this year
The Fed’s next meeting is on Jan. 31, but experts agree that officials are unlikely to make cuts on that date.
Instead, traders are pinning all their hopes on the next March 20 meeting. Traders have priced in a greater than 70 percent probability that the central bank will announce a 25 basis point rate cut on this date.
In total, traders predict that there will be three interest rate cuts in 2024.
However, the forecasts assume that inflation will continue on a downward trajectory.