Sticky US inflation points to a more cautious Fed in 2025

Fresh inflation figures are likely to make the US Federal Reserve more cautious about the pace of interest rate cuts - but not quite yet.

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NEW YORK - Fresh inflation figures are likely to make the US Federal Reserve more cautious about the pace of interest rate cuts, but not quite yet.

Investors still widely expect the US central bank to cut borrowing costs by a quarter percentage point next week after a new report showed inflation rose in November in line with expectations.

But persistent price pressures have also underscored concerns that progress towards the US central bank's 2 percent target may be stalling.

Those concerns could prompt officials to rein in the number of rate cuts they anticipate in 2025 as they wait for more confirmation that inflation is on track to reach their goal.

Policymakers will release new forecasts and rate projections at the conclusion of their Dec. 17 to 18 meeting in Washington.

"I think they can safely go ahead and do a 25 basis point cut in December. The markets are prepared for that," said Ms. Loretta Mester, a former president of the Cleveland Fed. "However, they've got to be rethinking about next year, because it does look now that the inflation progress has stalled out a bit."

Just three months ago, the Fed kicked off its cutting cycle with an aggressive half-point move driven by growing worries that a cooling US labor market was nearing a dangerous tipping point.