U.S. and European stocks advanced on Tuesday, along with U.S. futures, as analysts predict that the United States inflation data due to be posted later in the day will be the lowest of the year. Should this forecast prove accurate, it could influence the Federal Reserve to ease its tight monetary policy.
According to economists’ projections, November’s U.S. consumer price index is expected to rise by 7.3%. This would be the lowest reading in 11 months and a fifth consecutive monthly drop. Although still above the Federal Reserve’s 2% target, this decelerating growth rate could convince the Fed to ease its monetary policy.
Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, noted that this change could also set a low bar for disappointment and ultimately, a selloff. “Today’s US CPI data will give us an idea on how the market pricing for the Fed’s terminal rate will clash with the dot plot projections that will come out tomorrow, and that will, in all cases, hammer any potentially optimistic market sentiment.”
Aside from the latest U.S. economic news, investors will also keep a close eye on the actions of the European Central Bank, with its rate decision due on Thursday.