News

The S&P 500 and the Nasdaq dipped on Friday as fears over high interest rates next year loomed, although a cooler-than-expected inflation report kept losses in check. A Commerce Department report showed the Personal Consumption Expenditure (PCE) index, the Fed's preferred inflation measure, rose 2.4% in November on an annual basis, below estimates of 2.5%, as per economists polled by Reuters. Wall Street was jolted this week after the Fed forecast only two rate reductions in 2025 and raised its inflation estimate, in a nod to the economy's continued resilience and still-high inflation.

Federal Reserve Bank of New York President John Williams said Friday he expects the central bank to deliver more interest rate cuts but noted that what happens will be driven by incoming data, amid a policy that is still providing restraint on the economy's momentum. Even with this week's rate cut Williams thinks "we're pretty restrictive" with monetary policy, meaning short-term rates are continuing to restrain the economy, which should help further an easing in inflation pressures, he told CNBC in an interview. As for where the Fed goes next with monetary policy, "the baseline trajectory is moving down towards neutral rates," Williams said, suggesting some sort of rate cut combinations were still in his outlook.

(Reuters) -Federal Reserve policymakers, fresh from an interest rate cut this week, on Friday signaled their readiness to take a break from further reductions in borrowing costs next year as they take stock of progress to lower inflation. San Francisco Fed President Mary Daly, who supported the U.S. central bank's decision on Wednesday to cut its benchmark overnight rate by a quarter of a percentage point to the 4.25%-4.50% range, and Cleveland Fed President Beth Hammack, who dissented against it, said the decision was a "close call." And while Daly and New York Fed President John Williams both said they felt the central bank would likely resume the rate-cutting next year, neither suggested any need to hurry.

WASHINGTON (Reuters) -U.S. consumer spending increased in November amid strong demand for a range of goods and services, underscoring the economy's resilience, which saw the Federal Reserve this week projecting fewer interest rate cuts in 2025 than it had in September. The report from the Commerce Department on Friday showed moderate monthly rises in prices, with a measure of underlying inflation posting its smallest gain in six months. "The economy continues to grow from strong consumer demand as income growth and the wealth effect from higher portfolio values give consumers capacity to spend," said Jeffrey Roach, chief economist at LPL Financial.

An inflation gauge that is closely watched by the Federal Reserve barely rose last month in a sign that price pressures cooled after two months of sharp gains. The milder inflation figures arrive two days after Federal Reserve officials, led by Chair Jerome Powell, rocked financial markets by revealing that they now expect to cut their key interest rate just two times in 2025, down from four in their previous estimate. Stickier inflation, Powell said, “might be the single biggest factor” causing the central bank to reduce the number of rate cuts it envisions.

LONDON (Reuters) -U.S. stock index futures pared some declines on Friday after data showed inflation in the world's largest economy cooled slightly last month, while European shares came under fire after Donald Trump's latest threat to impose tariffs. U.S. Treasury yields also fell, with the benchmark 10-year yield sliding 6.6 basis points (bps) to 4.504%. U.S. stock futures were down 0.6-0.8%, indicating Wall Street was set to open lower, but that compared to declines of 0.8-1.3% earlier in the day.

NEW YORK (Reuters) -Federal Reserve Bank of Cleveland President Beth Hammack said Friday she voted against the central bank’s rate cut earlier this week because economic strength and the inflation outlook argued against easing policy. With monetary policy "not far" from a neutral stance, Hammack said she wants monetary policy to hold steady "until we see further evidence that inflation is resuming its path to our 2 percent objective,” she said in a statement released Friday as the quiet period around the most Federal Open Market Committee ended. On Wednesday, the Fed met expectations and cut its federal funds target range by a quarter percentage point, to between 4.25% and 4.5%.