U.S. inflation data surprised to the downside on Thursday, potentially setting the economy up for continued Federal Reserve rate cuts next year.
The Consumer Price Index (CPI) rose 2.7%. year over year in November, according to a Thursday report from the Bureau of Labor Statistics. Economists’ expectations were for a 3.1% increase and the previous reading was 3%.
Core CPI, which excludes food and energy, rose 2.6% versus previous forecasts of 3% and 3%.
Monthly data was not included because BLS statisticians continue to suffer the effects of the October government shutdown.
The market reaction was immediate. with bitcoins adding about 0.5% to previous gains, and is now trading back above $88,000. US stock index futures also contributed to earlier gains; the Nasdaq 100 now gains 1.15%. The 10-year Treasury yield fell two basis points to 4.12%.
Before the data, 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.
