US inflation numbers surprised to the downside on Thursday, potentially setting the economy up for continued interest rate cuts by the Federal Reserve next year.
The consumer price index (CPI) rose 2.7 per cent. on an annualized basis in November, according to a Thursday report from the Bureau of Labor Statistics. Economists’ expectations had been for a 3.1% increase, and the previous reading was 3%.
Core CPI – which excludes food and energy – rose 2.6% against earlier forecasts of 3% and 3%.
Monthly data was not included as BLS statistics continue to suffer from the effects of October’s government shutdown.
The market’s reaction was swift. with bitcoin adding about 0.5% to previous gains, and now trading back above $88,000. US stock index futures also added to earlier gains, with the Nasdaq 100 now ahead by 1.15%. The 10-year government yield fell two basis points to 4.12 per cent.
Ahead of the data, markets were pricing in a 73% probability that the Federal Reserve would leave interest rates unchanged at its January meeting, according to the CME FedWatch tool.
