US Inflation Rises to 2.9% inline with Expectations

Inflation in the united sates rose to 2.9% during December as expected, compared to 2.7% in November.

On a monthly basis, the inflation rate recorded 0.4%, but it is faster than in November at 0.3%.

The core inflation was 3.2% year-on-year, below expectations of 3.3%.

Inflation in the United States rose to 2.9% in December in line with expectations, prompting investors to increase their bets on cutting interest rates this year.

Wednesday's data from the Bureau of Labor Statistics matched the forecasts of economists polled by Reuters and were higher than the figure recorded in November of 2.7%.

Futures for US stocks and government bonds rose immediately while the dollar fell after the release of the latest inflation data.

Contracts following the S&P 500 stock index rose 1.5%, while contracts following the Nasdaq 100 index involving technology companies rose 1.8%.

In government bond markets, the yield on two-year policy-sensitive Treasury bonds fell 0.08 percentage points to 4.29 percent, while the yield on 10-year bonds - a benchmark for global borrowing costs - fell by 0.09 percentage points to 4.7 percent and yields decline as prices rise.

Federal Reserve officials have indicated that they are planning a "cautious approach" to cutting interest rates amid growing concerns that inflation may not fall quickly to the central bank's target of 2 percent.

Investors are now betting that the Fed will cut interest rates by July - compared to September before the release of the data.

Future markets now point to a 60 percent chance of a second cut this year, up from 20 percent earlier on Wednesday.

Most investors and analysts believe that the Federal Reserve will not cut interest rates again at its next policy meeting later this month.

U.S. central bank governors have indicated in their own forecasts that they will only cut interest rates by another 50 basis points this year.

President-elect Donald Trump, who will take office next Monday, has made strict plans to impose tariffs on a large segment of imports, crack down on illegal immigrants and approve comprehensive tax cuts. Economists warned that such plans could lead to higher inflation.