US Inflation Final Domino in Fed Rate Hike Decision

Inflation numbers from the United States on Tuesday could be the provide the final domino in the Federal Reserve’s track to raise interest rates next month.

Earlier in November a robust report on U.S. employment hardened expectations for the Fed’s first rate increase in nearly a decade and if prices are shown to be rising steadily those views will likely solidify.

Reuters polls see inflation a 1.9 percent year-on-year, unchanged from the previous reading.

Minutes from the Fed’s October meeting will also be published, giving an insight into the Committee’s decision to remove a key sentence on global risks from its policy statement.

“We have had a strong October jobs report and Fed Chair Janet Yellen herself referring to a December rate rise as a ‘live possibility’ for the first time,” said Chris Hare, economist at Investec.

“The coming week should shed a little more light on the prospects for tightening this year.”

While most U.S. data has been relatively upbeat, retail sales rose less than expected in October, suggesting a slowdown in consumer spending that could temper expectations of a strong pickup in fourth-quarter economic growth.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza