US inflation cools in November, easing pressure on Fed to cut rates

U.S. inflation cooled in November, with the year-over-year consumer price index rising 2.7 percent, down from 3.0 percent in September and below many economists’ expectations. The Labor Department’s release, delayed by the federal government shutdown, nonetheless pointed to a softer pace of price gains that could bolster the case for the Federal Reserve to continue trimming interest rates. Prices for items such as hotels, milk and some clothing eased from earlier in the year, while other components remained firmer.

Analysts said the reading signals that inflation may be moderating, but cautioned that shutdown-related distortions and the absence of October data complicate interpretation. “All told this is a positive report that comes with an asterisk,” said Art Hogan, chief market strategist at B. Riley Wealth. He noted that subsequent CPI readings are likely to smooth out any statistical errors that might have been present in today’s data. The report also showed an unusual slowdown in rents and other housing costs, which are heavily weighted in inflation calculations and have been a key concern for households.

But Bernard Yaros, lead economist at Oxford Economics, cautioned that the easing could be noise rather than signal given the shutdown disruptions. Inflation earlier this year had been pressured by tariff increases on items such as toys, appliances and furniture, though the administration has rolled back some measures and exempted staples like bananas and coffee from tariffs. Officials have framed inflation as a temporary, policy-linked phenomenon, while acknowledging that price pressures could shift as supply chains adjust.

Some economists said Friday’s data could strengthen the case for further Fed rate reductions, even as the rate remains above the 2 percent target. “Inflation is moving in the right direction, and the data have opened the door a little wider for additional rate cuts,” said Ellen Zentner, chief economist for Morgan Stanley Wealth Management.

Trump administration officials have blamed the price increases seen when he took office for ongoing inflation concerns, arguing that any further rise tied to tariffs would be one-time. Still, analysts have warned that price pressures could spread to other areas as labor supply tightens in sectors such as farming, hospitality and construction amid tighter immigration controls.

In a primetime address, President Donald Trump asserted that inflation had “stopped” and urged the Federal Reserve to deliver relief through lower borrowing costs, saying he would appoint a new central-bank leader “who believes in lower interest rates by a lot.” Analysts caution that the policymaking path will depend on how inflation evolves in coming months and on the Fed’s assessment of risks to growth.

Overall, the November CPI suggests some cooling in inflation dynamics, but observers say the trajectory remains uncertain and data from subsequent releases will be closely watched for confirmation of a durable trend toward the Fed’s target.