Don't be too happy too early! Goldman Sachs: November CPI is unlikely to change the Fed's interest rate cut prospects.

This Thursday, Eastern time, the latest US CPI data for November was released, which initially delighted the market: both the US November CPI and core CPI data were lower than expected, leading to increased bets on the Federal Reserve cutting interest rates next year. However, Goldman Sachs, a Wall Street investment bank, believes that this CPI data is unlikely to substantially change the short-term policy outlook for the Federal Reserve. The bank pointed out that Federal Reserve policymakers will pay more attention to the December CPI data in order to evaluate the true level of inflation in the United States. Will the November CPI data not affect the Federal Reserve? Goldman Sachs stated that despite the November CPI report showing signs of slowing overall and core inflation in the United States, this report is "unlikely to have a significant impact on the Federal Reserve". They noted that the December CPI data will be released before the January Federal Reserve interest rate decision, at which time the Federal Reserve will apparently focus more on that updated inflation report. Goldman Sachs also pointed out that the unexpected decline in core CPI in the November report was mainly due to technical and timing-related factors, rather than a general easing of overall inflationary pressures. Specifically, in this report, housing-related inflation data clearly lagged behind long-term trends, significantly dragging down the overall index. However, the cooling of housing-related data is likely due in part to technical reasons related to the missing October data and also potentially related to the later collection of November prices. In addition to the CPI, Goldman Sachs estimates that the Federal Reserve's preferred inflation gauge - the core personal consumption expenditures (PCE) price index - had monthly increases of 0.12% in October and November. Goldman Sachs predicts that the US PCE will rise by 0.10% in October and 0.14% in November, which will result in a core PCE annual rate of 2.66% for November, lower than 2.83% in September. By the way, the official release date for the November personal consumption expenditure (PCE) and core PCE data has not yet been determined by the US government. Future data could still reverse Goldman Sachs warned that investors should not overinterpret this weak CPI data. The bank pointed out that the US Bureau of Labor Statistics has not yet made it clear how they will address the data distortion that has been discovered, which also means that there may be a risk of reversal in this batch of data in the coming months. Goldman Sachs also expects that when future data is released, some of the softness in housing prices will change, and commodity inflation may also see a slight rebound in December. Therefore, Goldman Sachs believes that the Federal Reserve will continue to be patient in its path of cutting interest rates, and Federal Reserve officials may rely on a broader range of data series when making policy decisions early next year, rather than just the current individual CPI data. This article is reproduced from "Cai Lian Society", GMTEight Editor: Xu Wenqiang.