The United States has released inflation data based on Personal Consumption Expenditures (PCE), which significantly impacts market movements during trading on Friday (December 20, 2024).
The annual PCE inflation rate was reported to have risen by 2.4% year-on-year (YoY) in November, falling short of the Trading Central forecast of 2.5% YoY, but exceeding the previous month’s figure of 2.3% YoY.
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In contrast, the core PCE inflation also recorded a YoY increase of 2.8%, which was lower than the projected 2.9% YoY, but consistent with the October growth rate of 2.8% YoY.
The PCE inflation rate serves as a benchmark for the Federal Reserve in establishing monetary policy, and thus, this data release has a considerable effect on the financial markets.
Following the PCE release, gold prices rose to around $2,609 per troy ounce, marking the peak for the day. Meanwhile, the US dollar faced pressure; EURUSD climbed to about 1.04191, and GBPUSD surged to 1.25542. The USDJPY fell to 156.338, whereas the previously plummeting Nasdaq index was able to recover near the 21,000 mark.
The stagnation in the core PCE growth certainly brings hope for a potential decline in the future, which could prompt the Federal Reserve to adopt a more aggressive stance in cutting interest rates next year.
As noted in their monetary policy announcement early Thursday, the Fed projected that it would only reduce interest rates twice next year. However, should the core PCE growth continue to slow, there could indeed be room for the Fed to be slightly more aggressive in rate cuts.
