US inflation data aligns with expectations

Inflation in the United States showed consistency in October, as the Federal Reserve's preferred gauge indicated stable price pressures, while labor market data pointed to sustained strength.

The Personal Consumption Expenditures (PCE) price index rose by 0.2% month-over-month, with the core measure—which excludes volatile food and energy prices—advancing by 0.3%. Both metrics matched September's figures and aligned with market forecasts. On an annual basis, headline PCE inflation ticked higher to 2.3% from September’s 2.1%, marking a slight acceleration. Core PCE inflation edged up to 2.8% from 2.7%, maintaining its position above the Fed's 2% target.

Jobless claims point to robust labor market

Meanwhile, the US labor market continues to show resilience. Initial jobless claims dropped by 2,000 to 213,000 for the week ending November 23, defying expectations of a rise to 220,000. The four-week moving average of claims—a more stable measure—declined by 1,000 to 217,000.

However, continuing claims, which reflect longer-term unemployment trends, rose by 9,000 to 1.907 million for the week ending November 16, marking the highest level since November 2021. The four-week average for continuing claims climbed by 13,500 to 1.89 million, also reaching a two-year high.

ECB's Schnabel urges caution on policy easing

Across the Atlantic, the European Central Bank (ECB) is taking a measured approach to monetary policy adjustments. Executive Board member Isabel Schnabel emphasized the importance of restraint, pushing back against calls for more aggressive rate cuts or a shift toward highly accommodative policy.

In an interview with Bloomberg, Schnabel noted that the ECB could “gradually move toward neutral” as long as economic data aligns with its baseline projections. However, she ruled out the likelihood of deeper policy easing, stating, “From today’s perspective, I do not think that would be appropriate.”

Schnabel expressed skepticism over larger rate adjustments, such as half-point cuts, advocating instead for incremental changes. Premature easing, she warned, could prove counterproductive, particularly if underlying structural weaknesses in the economy are not addressed.

“The costs of moving into accommodative territory could be higher than the benefits,” Schnabel remarked, adding that exhausting policy tools too soon could leave the central bank ill-equipped to handle future economic shocks.