Inflation cooled unexpectedly in November, although economists cautioned that gaps in the data make it too early for the White House to declare victory.

The November consumer price index reported prices rose at a 2.7 percent rate from a year earlier, cooler than the most-recent reading from September, according to new data from the Labor Department on Thursday. “Core” inflation, the rate without volatile food and energy costs, increased at an annual rate of 2.6 percent, an improvement from September.

That kind of cooling reflects the best inflation report since President Donald Trump took office. However, unlike prior inflation reports, this one lacked data, especially many of the month-to-month changes in inflation in certain sectors, due to the six-week government shutdown that prevented data collection in October.

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Officials held key interest rates in the Eurozone at levels set in June once again on Thursday, with main measures of economic health in the currency area forecast to support the current path for quite some time.

The European Central Bank decided to leave rates as is for a fourth straight meeting, as anticipated by economists, keeping its benchmark discount rate at 2% and thus staying the course for nearly six months. A continued hands-off approach is likely, according to most economists – some analysts said current rates could survive through all of next year, with a number predicting the next move will be an increase in interest rates sometime in 2027.

ECB President Christine Lagarde refused to commit to the direction of the bank’s next move, noting that all options remain on the table. Officials were unanimous in their decision to leave interest rates as is this month, she said, adding that neither a hike nor a cut was discussed.

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It was a close call, but Christmas came early for UK households as the Bank of England delivered on expectations and lowered borrowing costs.

The Monetary Policy Committee voted by a narrow 5–4 margin to cut Bank Rate by 25 basis points to 3.75% at the conclusion of its two-day meeting. Governor Andrew Bailey cast the decisive vote, siding with the doves, while Megan Greene, Clare Lombardelli, Catherine Mann and Huw Pill voted to keep rates on hold.

In its accompanying statement, the Bank acknowledged that inflation had fallen further since the previous meeting, with both pay growth and services price inflation continuing to ease. Policymakers also pointed to subdued economic growth and increasing slack in the labour market.

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The BoJ’s Policy Board is widely expected to raise its target rate by 25 basis points to 0.75% on Friday.

Comments from Governor Kazuo Ueda reinforced market conviction. Speaking to business leaders in Nagoya on 1 December, Ueda said the contraction seen in Q3 was temporary and that the economy would “return to positive growth” thereafter.

On inflation, he noted that sizeable positive contributions from rice and other food items largely reflected temporary cost-push factors.

Turning to monetary policy, Ueda said the Bank recognised that real interest rates remained at “significantly low levels”, well below the level neutral to economic activity and prices. “In other words, even if the policy interest rate is raised, accommodative financial conditions will be maintained,” he said.

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Central banks in big economies are signalling a change of stance, with many now on hold after a long easing cycle, and policymakers flagging that their next moves could be rate hikes if inflation takes hold again.

The European Central Bank all but confirmed it was done with monetary easing, while the Bank of England cut rates in a narrow vote as dissenters cautioned about price pressures. Markets still expect more U.S. monetary easing next year, but some Federal Reserve policymakers have also warned the world’s biggest economy might already be running too hot.

Here’s where central banks in 10 developed markets stand:

(BNN - Continue Reading)