The rate of US annual consumer price inflation rate picked up at a faster pace than the market hoped, figures on Thursday showed, hitting some of the more optimistic hopes in the market for an early interest rate cut by the Federal Reserve.
According to the Bureau of Labor Statistics, annual inflation picked up to 3.4% in December, from 3.1% in November.
The reading was hotter than the 3.2%, economists expected.
Annual core inflation - which excludes food and energy - also came in above forecast at 3.9%, against expectations of 3.8%, although it eased from 4.0% in November.
On a monthly basis, consumer prices were 0.3% higher in December from November. They had risen 0.1% in November from October.
Core consumer prices rose 0.3% on month in December, matching the pace of growth seen in November.
Nigel Green at deVere group believes that there’s still not enough evidence for the central bank to start cutting rates.
“With inflation remaining sticky, we expect rates will be higher for longer. We don’t see a policy pivot in sight," he added.
He thinks markets have been "exuberant and got carried away with the idea that the Fed – and its major central bank peers- will start rolling out rate cuts in 2024."
“The markets have been pricing-in these cuts too quickly."
“There’s a reality chasm between what the Fed has signalling regarding rate cuts and what the markets are expecting," he added.