BOJ Delivers Expected 25bps Hike: Inflation-Solid Path Forward and Outlook

US November CPI Rises 2.7% YoY Below Expectations Inflation Eases

The U.S. Bureau of Labor Statistics reported that the year-on-year growth rate of the Consumer Price Index (CPI) in November stood at 2.7%, a clear slowdown from the previous reading of 3.0% and below the market expectation of 3.1%. Core CPI also eased to 2.6% year-on-year, coming in below both the prior figure and market expectations, indicating a continued moderation in underlying inflation pressures and a notable cooling in overall inflation momentum. Breakdown and key drivers: Core CPI rose 2.6% year-on-year (previous and consensus: 3.0%), with a monthly increase of around 0.2% to 0.3%. Higher housing and healthcare costs partly offset the disinflationary impact from declining energy prices. Food CPI increased by around 2.5% year-on-year, slightly lower than the previous period, mainly due to stable grain prices. Energy CPI declined 1.0% year-on-year, with gasoline prices falling about 3% month-on-month, serving as the primary driver of the overall inflation pullback. Housing-related components rose 4.0% year-on-year and remain a key factor constraining further declines in core inflation. Utility and insurance costs also moved higher, while manufacturing input cost pressures eased amid supply chain improvements and diminishing tariff impacts. The latest data were largely driven by falling energy prices and ongoing supply chain normalization. However, the partial government shutdown delayed the release of October data, affecting the precision of short-term month-on-month comparisons. According to the Federal Reserve’s November Beige Book, retail and manufacturing sectors continue to face cost pressures from tariffs, though overall price increases remain moderate. November CPI data came in better than expected, further confirming the disinflationary trend and easing concerns over the prolonged maintenance of high interest rates, which is supportive of risk assets. In the near term, the market expects December CPI to rebound slightly by 0.1 to 0.2 percentage points, while core inflation is likely to remain within the 2.5% to 2.8% range. Sentiment toward U.S. equities and bonds remains constructive, with the yield curve continuing to flatten. Over the medium term, if the labor market remains stable, the Federal Reserve may begin cutting rates by 50 to 75 basis points in the first half of 2026. A weaker U.S. dollar would benefit emerging markets, though uncertainties surrounding tariff policy warrant continued attention. Read More at Datatrack