- A report from the Labor Department indicates that used car and truck prices rebounded last month while consumers also had to pay more for healthcare and auto insurance.
- According to the Labor Department, the Consumer Price Index (CPI) inched up by 0.1% last month.
- There was an increase in food prices, and inflation remains above the Federal Reserve’s goal of 2%.
- The Federal Reserve might wait until inflation trends have settled before adjusting interest rates.
Increased Prices for Used Cars, Health Insurance, and Auto Insurance
The Labor Department has disclosed in its recent report that used cars and trucks had a price elevation last month, ending a five-month declining streak. This price rebound has positively affected the underlying inflation. Additionally, U.S. citizens had to pay more in terms of health care and auto insurance costs.
Employment and Inflation Aspects
Positive data released last Friday showed job growth in November and a decrease in the unemployment rate to 3.7%, down from a nearly two-year high of 3.9% in October. Concurrently, underlying inflation has been experiencing a slight uptick. On account of these developments, U.S. central bank officials convened a two-day policy meeting this Tuesday.
The Fed’s Reaction
Senior economist at PNC Financial in Pennsylvania, Kurt Rankin, suggests that early calls for fast and immediate ease of Fed’s monetary policy due to ongoing housing price pressures should warrant careful inspection. He believes, “The Fed will not cut rates until inflation’s drivers are well and truly tamed.”
Consumer Price Index and Inflation
The Labor Department’s Bureau of Labor Statistics reported a minor increase of 0.1% in the Consumer Price Index (CPI) last month. Food prices saw a rise of 0.2% but prices of meats, fish, and eggs fell. Despite these fluctuations, Inflation remains stubbornly above the Federal Reserve’s 2% target, causing financial markets to delay expectations of a rate cut until May.
The Impact on Forex and Trading
The ongoing fluctuations in inflation and the potential Federal Reserve’s policy adjustments to manage it can have significant implications on the forex market and trading. Assets, particularly those sensitive to inflation changes such as commodities, might observe notable shifts in their values.