Although stocks fell slightly on Thursday, investors mostly ignored recent reports showing that inflation remains a very real problem. But Bank of America believes they may be forced to do so in the new year as inflation becomes more severe. “Potential policy changes on the horizon – higher tariffs, deficit-financed tax cuts, and tightening immigration policies – could all put upward pressure on prices. In fact, we expect core PCE to rise as a result of these policy changes. Inflation has barely fallen in the past few years. The last two inflation data shows that the deflation process has stalled. The U.S. Bureau of Labor Statistics reported on Wednesday that the November consumer price index showed that the 12-month inflation rate rose last month. Inflation also rebounded in October from 0.3% to 2.7%, with the CPI rising by 0.2% to 2.6%, an increase of 0.2 percentage points from September. Similarly, the producer price index released on Thursday showed. , wholesale prices rose 0.4% last month, higher than the Dow Jones consensus estimate of 0.2%. After the November CPI data was in line with expectations, the probability that the Federal Reserve will cut interest rates by 25 percentage points at next week’s meeting rose to about 98%, as Beyond that, the outlook remains “bleak,” as 30-day federal funds futures prices suggest. “At next week’s meeting, the Fed will also have to acknowledge the lack of progress on inflation,” he elaborated. “We think a pause is likely in January, with the risk that policy changes could make the pause longer.”
Is an inflationary reckoning coming in 2025? Investors ignore stubborn readings | Real Time Headlines
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