U.S. inflation data surprised to the downside on Thursday, potentially setting the economy up for more rate cuts from the Federal Reserve next year.
The Consumer Price Index (CPI) increased by 2.7%. on an annual basis in November, according to a report released Thursday by the Bureau of Labor Statistics. Economists expected an increase of 3.1%, compared to 3% previously.
The core CPI – which excludes food and energy – increased by 2.6% compared to 3% and 3% previously forecast.
Monthly data was not included as BLS statisticians continue to experience the effects of the October government shutdown.
The market reaction was rapid. with Bitcoin adding around 0.5% to earlier gains, now trading above $88,000. U.S. stock index futures also contributed to earlier gains, with the Nasdaq 100 now ahead 1.15%. The 10-year Treasury yield slipped two basis points to 4.12%.
Before the data was released, markets were pricing in a 73% chance that the Federal Reserve would leave interest rates unchanged at its January meeting, according to the CME FedWatch tool.
