ARLINGTON, Va.—Despite decelerating consumer prices in November, the Federal Open Market Committee is still on track to raise rates next week, says one economist.
"Given the current outlook on inflation and economic growth, however, the committee is likely to downgrade the number of projected rate hikes for 2019 from three to just two," said NAFCU Chief Economist and Vice President of Research Curt Long in a NAFCU Macro Data Flash report.
Overall consumer prices were unchanged in November and year-over-year growth decelerated to 2.2%. Data from the Bureau of Labor Statistics show that core prices (excluding food and energy costs) increased 0.2% in November compared to the previous month. Year-over-year core CPI growth remained at 2.2%.
"Higher costs for shelter, healthcare and used vehicles were offset by a 4.2% decline in gasoline prices," Long explained. "The decline in oil prices is likely transitory. OPEC and other oil producers agreed earlier this month to slash production in a bid to support prices."
Energy prices fell 2.2% in November, following a 2.4% increase in October. From a year ago, energy prices were up 3.2%. Food prices increased 0.2% in November; year-over-year growth increased 1.4%, Long noted.
The FOMC last raised rates in September to a range of 2 to 2.25%. The committee meets again Dec. 18-19.