Inflation continued to edge down in November on a monthly basis, reinforcing the likelihood that the Federal Reserve holds interest rates steady at its final meeting of the year on Wednesday.
Consumer prices were up 3.1% in November from a year earlier, down from 3.2% in October, according to data released by the Bureau of Labor Statistics on Tuesday. “Core” price growth, excluding food and energy, remained unchanged in November from the prior month, hovering at 4.0%.
However, the index for shelter continued to climb month over month in November, offsetting a decline in gas prices. The index for shelter increased 0.4% month over month and 6.5% year over year. Shelter inflation, which has remained stickier than expected, typically lags observed prices by approximately six to twelve months.
“Housing costs, in particular, are weighing on many individuals and families,” Bright MLS Chief Economist Lisa Sturtevant said in a statement. “Rent pressures have started to ease in some regions, which will eventually be reflected in the CPI numbers. Home prices, however, are still on the rise in much of the country. Higher mortgage rates, which make buying a home more expensive, have come down some in the past few weeks, as it has become clearer that the Fed is done with rate hikes. But affordability will still be a big issue for the housing market in 2024.”
What to expect from the Fed tomorrow?
The inflation data comes on the heels of a stronger-than-expected November jobs report. Traders priced in a nearly 98.4% chance the Fed will hold interest rates steady on Wednesday, according to the CME Group’s FedWatch tool.
“It is very likely that the Fed is done with rate hikes, and will continue to watch the data to see if the prior interest rate increases have been enough to bring down inflation without slowing the overall economy,” Sturtevant said.
As a result, mortgage rates have already trended down in anticipation of the meeting, declining for the fifth straight week.
“Even further declines are possible once the Fed actually does cut its short-term fed funds rates,” NAR Chief Economist Lawrence Yun said. “Mortgage rates will slide under 7% next year and may reach 6% in a year.”
Related
Source link
