The US Bureau of Labor Statistics (BLS) released US consumer price data yesterday, which showed the US inflation rate cooled off in November. Core inflation, which excludes volatile items such as food and energy, also moderated during the month. The BLS did note it will not release inflation data for October, which was delayed in response to the US government shutdown. This hindered the group’s ability to collect data. Across the Atlantic, two major central banks made interest rate announcements yesterday.

• The US inflation rate slowed to 2.7% on a year-over-year basis in November, surprising economists who were expecting inflation to rise to 3.1%, according to a Bloomberg survey. The annual inflation rate was 3.0% in September. This marked its first decline since April.
• The growth in energy prices accelerated in November compared to September, while the increase in food and new vehicle prices slowed.
• The core inflation rate rose by 2.6% in November over the same month last year, which came in below economists’ expectations and was the lowest rate since March 2021.
• Over in Europe, the European Central Bank held its main policy interest rates steady at its December meeting, its fourth consecutive meeting keeping rates unchanged.
• On the other hand, the Bank of England (BoE) lowered its key interest rate by 25 basis points to 3.75%. This was the BoE’s first rate cut since August, with the UK economy struggling and inflationary pressures softening.

The lower-than-expected inflation rate in the US raised bets the US Federal Reserve Board (Fed) may cut interest rates more than once in 2026. Fed officials expect one rate cut in 2026, based on the outlook from their last meeting. The Fed has lowered its federal funds rate at three straight meetings to end 2025 as it sought to help support the US economy and labour market. Meanwhile in Canada, the Bank of Canada held its benchmark interest rate steady in December and is expected to stay put unless economic conditions shift.

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