The US Consumer Price Index (CPI) report for November, a key measure of inflation, is due out on Wednesday at 13:30 GMT by the Bureau of Labor Statistics (BLS).

Markets are eagerly awaiting the release, as it could trigger significant swings in the US Dollar (USD) and influence the Federal Reserve's (Fed) plans for interest rates in the coming months.

As per the CPI measure, US inflation is expected to rise at an annualized rate of 2.7% in November, slightly higher than the 2.6% growth reported in the previous month. Annual core CPI inflation, which excludes volatile food and energy prices, is projected to hold steady at 3.3% over the same period.

On a monthly basis, headline CPI and core CPI are expected to rise by 0.3% each.

Previewing the October inflation report, TD Securities analysts said: "We expect core inflation to be largely unchanged in November, posting a solid 0.3% increase w/w. Rising prices are expected to account for most of the strength in the series, while slowing housing inflation is likely to provide some relief. On a y/y basis, headline CPI inflation is expected to edge up slightly to 2.7% while core inflation is likely to remain unchanged at 3.3%."

In his latest remarks at an event hosted by the New York Times on Dec. 4, Federal Reserve Chairman Jerome Powell said that the central bank's approach to future interest rate adjustments could take a more measured approach, thanks to the economy's stronger-than-anticipated performance this year.

Reflecting on economic growth, Powell noted that resilience has exceeded previous estimates, allowing the Fed to take a more cautious stance as it seeks to find a "neutral" interest rate policy. He acknowledged that "the economy is strong, and stronger than we thought in September," even though inflation has run a little higher than anticipated.

Powell explained that this backdrop is shaping the Fed's outlook as it prepares for its upcoming meeting on Dec. 17-18, a session that markets widely expect will see another rate cut.

source: Investing.com