This week, the focus of attention for markets and economists will be on the U.S. November inflation figures and the latest update on consumer spending before the holiday season.

Federal Reserve Chairman Addresses the Nation

On Wednesday afternoon, all eyes will be on Federal Reserve Chairman Jerome Powell as he delivers a significant speech.

According to a survey conducted by the Wall Street Journal, economists anticipate a slight decrease in headline inflation but a solid increase in core inflation. Headline inflation is projected to remain unchanged for the second consecutive month, whereas core inflation is expected to rise to 0.3% from 0.2% in October. Michael Gapen, a U.S. economist at Bank of America, explains that the soft headline inflation can be attributed to energy prices, while the acceleration in core inflation reflects fluctuating components like used car prices and hotel costs. Overall, inflation over the past year is forecasted to have increased to 4%, while core inflation is anticipated to reach 3% in November.

November Wholesale Inflation Analysis

Date: Wednesday, Time: 8:30 a.m. Eastern

In addition to the aforementioned inflation figures, economists predict that U.S. producer prices rose by 0.1% in November after experiencing a 0.5% decline in the previous month. Gapen suggests that this report will continue to indicate a decrease in input costs, which should help mitigate potential risks of increase in consumer goods price inflation.

In summary, this week’s economic developments are expected to shed light on U.S. inflation trends and the state of consumer spending ahead of the upcoming holiday season.

Fed Policy Decision, Powell Presser

The Federal Reserve’s policy decision and Powell’s press conference are highly anticipated events in the financial market.

Wednesday, 2:00 p.m. Eastern

The Federal Reserve has chosen to maintain its benchmark interest rate within the range of 5.25% to 5.5%. This decision has remained unchanged since July. However, the focus has shifted from contemplating how high interest rates should go to determining how long they should be kept at elevated levels. The central bank is cautious about conveying any indication of a potential easing of monetary policy, as this might fuel market expectations of rapid rate cuts in 2024, according to economists.

November Retail Sales

The performance of retail sales in November is a significant factor that economists are observing closely.

Thursday, 8:30 a.m. Eastern

According to economists surveyed by the Wall Street Journal, it is projected that retail sales experienced a slight decline of 0.1% in November, marking the second consecutive month of decrease.

This potential consecutive drop in retail sales will be the first occurrence since the first quarter.

Auto sales demonstrated weakness in November. However, if autos are excluded from the calculation, retail sales are expected to exhibit a modest increase of 0.1%.

“U.S. consumers have displayed unwavering spending habits, but a combination of challenging factors, such as elevated interest rates, high prices, and a slowdown in job growth, are now starting to have an impact,” commented Scott Anderson, Chief U.S. Economist at BMO Capital Markets.

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