96% chances of 25 basis point US Fed rate cut. What is fueling high expectations from US Federal Reserve?

The US government's inflation reading kept intact bets on the Federal Reserve cutting interest rates later this month, as per a Reuters report.

A Labor Department report showed the Consumer Price Index (CPI) rose 0.3 per cent on a monthly basis in November, compared with the 0.3 per cent increase forecast by economists polled by Reuters. Annually, it stood at 2.7 per cent, in line with estimates, Reuters reported.

Core inflation, which excludes volatile components such as food and energy, came in at 3.3 per cent as expected, as per the Reuters report.


"Everything's exactly in line with estimates ... it's very likely that you will see the Fed probably go ahead with what they projected, cutting 25 basis points (later this month)," said David Miller, chief investment officer at Catalyst Funds.

Bets on the Fed cutting 25 basis point cut next week jumped to over 96 per cent, compared with an 86 per cent chance before the data, according to CME's FedWatch Tool. Bets had risen following Friday's employment report, which showed an uptick in unemployment alongside a surge in job growth.

Most megacap and growth stocks were higher in premarket trading, with Tesla up 2.1 per cent and Nvidia gaining 1.6 per cent.

Wall Street's main indexes ended the previous session lower, weighed down by heavyweight technology stocks, yet the S&P 500 and the Nasdaq were near record levels.

U.S. equities have had a broadly positive start to December, with the S&P 500 and the Nasdaq clocking gains in their first week, after ending November on a strong note.

Also expected this week is a producer prices reading on Thursday.

Among other movers, GameStop gained 2.9 per cent after the videogame retailer reported a profit for the third quarter on cost-saving efforts.

General Motors was up 1.8 per cent after the automaker said on Tuesday that it would end robotaxi development at its majority-owned, money-losing Cruise business.

Macy's slumped 11.5 per cent after the department-store bellwether cut its annual profit forecast as persistent weakness in demand clouded its expectations for the holiday shopping season.

FAQs

Q1. What are key dates for US Fed rate decision?
A1. US Fed rate decision will be announced on December 18.

Q2. What is central bank of USA?
A2. The central bank of the USA is US Federal Reserve.