In December, an increase in consumer prices was recorded in the United States, the pace of which slightly exceeded preliminary expectations regarding the degree of intensity of the upward dynamic of the corresponding indicator.
It is worth noting that the mentioned figure as a fact of economic reality in the US is observed against the background of growth in energy goods costs. In this case, it was confirmed that inflation in the United States still continues to be elevated. The corresponding state of affairs in the space of the current configuration of the US economic system actually affirms the expediency of the Federal Reserve’s forecasts of fewer interest rate cuts in 2025 compared to preliminary expectations. In this case, it implies the expediency of the projections of the financial regulator in terms of their compliance with the situation in the economy.
The consumer price index in the United States showed an increase of 0.4% last month. The relevant information was published by the US Labor Department’s Bureau of Labor Statistics on Wednesday, January 15th. It is worth mentioning that in November, the mentioned indicator increased by 0.3%.
In the 12 months through December, the consumer price index in the United States grew by 2.9%. In November, an increase of 2.7% was recorded.
Economists polled by the media predicted that in December the consumer price index would grow by 0.3% month-on-month and by 2.9% year-on-year.
It is worth mentioning that the Fed’s inflation target is 2%. In the second half of last year, progress towards the corresponding goal of the central bank of the United States began to slow down.
In general, the US economic system is currently showing resilience. At the same time, in the context of the prospects related to the further dynamic of inflation, there are risks. In this case, it implies the intentions of Donald Trump, who won the United States presidential election in November and will return to the White House in the present month, to raise tariffs on imported goods and carry out mass deportations of undocumented immigrants. According to experts, the implementation of relevant intentions can accelerate inflation. In this case, it implies an intensification of the growth of the indicator. Against the background of the mentioned prospects, the central bank of the United States has moderated its plans for lowering borrowing costs in the current year.
At the same time, it is expected that the incoming administration of Donald Trump will cut taxes. The implementation of this likely decision will have a positive impact on the economic system of the United States.
It is worth noting that in January, soared the US consumer inflation expectations. Currently, households are concerned about the likelihood that an increase in tariffs on imported goods will trigger a growth in prices.
Excluding the volatile food and energy components, the consumer price index in the United States rose by 0.2% in December. The so-called core CPI increased by 0.3% for four straight months. In the 12 months through December, this indicator rose by 3.2%. In November, the growth of the figure was 3.3%.
Currently, the prevailing opinion among experts is that during the Fed’s monetary policy meeting, which will be held on January 28-29, will not make another decision on cutting interest rates. Economists expect a fewer lowering cost of borrowing in 2025. At the same time, there is no consensus among them as to whether the central bank of the United States will decide to cut interest rates before the second half of the current year. Goldman Sachs expects two lowering borrowing costs in 2025, in June and December. Initially, the experts of this financial institution predicted that the Fed would make three relevant decisions in the current year. Bank of America Securities reckons that the monetary policy easing cycle of the United States financial regulator has been completed. The Fed has started a corresponding cycle in September. Since then, the central bank of the United States has cut its benchmark overnight interest rate by 100 basis points to the current 4.5%-4.75% range.
The last decision on lowering the cost of borrowing by the US financial regulator was made in December. Officials of the central bank of the United States expect two interest rates cuts in the current year. Between March 2022 and July 2023, the policy rate in the US was hiked by 5.25%. The relevant actions of the United States financial regulator were aimed at combating rising inflation.
