U.S. inflation is expected to remain above the Federal Reserve’s 2% target in November, reinforcing the central bank’s cautious stance as the economic data calendar finally returns to normal following this year’s prolonged government shutdown. The upcoming Consumer Price Index (CPI) report, scheduled for release Thursday morning, will be the final major inflation update published on a disrupted schedule, marking a key moment for markets assessing the trajectory of monetary policy into 2026.
Consensus estimates suggest headline CPI rose 3.1% year over year in November, while core inflation—which excludes food and energy—is also expected to come in at 3.1%. That would represent a modest increase from the 3.0% readings recorded in September, the most recent inflation data available after October’s report was canceled during the shutdown. With no October data to provide a month-to-month comparison, investors will be forced to rely on broader trend signals rather than short-term momentum.
Despite inflation remaining elevated, economists generally view current price pressures as part of a gradual cooling process rather than a renewed acceleration. Demand across the economy has shown signs of moderation, particularly as higher borrowing costs continue to weigh on discretionary spending and business investment. However, progress toward the Fed’s target remains uneven, and several factors continue to complicate the inflation outlook.
One key source of persistence is goods inflation, which analysts say remains sticky due to tariffs and supply chain adjustments. While global logistics have improved compared to prior years, trade policy and cost pressures continue to filter through consumer prices. At the same time, services inflation—long viewed as a more stubborn component—has shown tentative signs of easing, helped in part by softer health insurance costs and slower wage growth in some sectors.
Recent labor market data adds another layer of complexity. The November jobs report, released earlier this week, showed stronger-than-expected job creation alongside an unemployment rate that rose to a four-year high. This combination suggests a labor market that is cooling, but not collapsing—an outcome that supports the Fed’s view that inflation can ease without triggering a sharp economic downturn.
As a result, markets increasingly expect the Federal Reserve to remain on hold at its January meeting. Futures pricing currently implies a relatively low probability of a rate cut in the near term, as policymakers wait for clearer evidence that inflation is moving sustainably toward target. The Fed’s most recent projections point to only one additional rate cut in 2026, following a series of quarter-point reductions late in 2025.
For investors, the message is one of patience rather than panic. Inflation remains above target, but the direction of travel appears constructive. As economic data resumes its regular cadence in the months ahead, policymakers and markets alike will gain a clearer picture of whether pricing pressures are continuing to fade or becoming entrenched once again. Until then, the Fed is likely to err on the side of caution, prioritizing long-term stability over short-term market expectations.