The US Consumer Price Index dropped by 0.3% in November. A drop of 0.2% was expected. Core CPI rose by 0.1%, below predictions of +0.1%. So, both figures came out below expectations.
EUR/USD is now sliding after an initial hesitance, still under 1.31. Also USD/JPY ticks down.
On a year-over-year basis, CPI rose by 1.8%, under expectations for 1.9%, and below October’s 2.2%. Core CPI also slid below 2%, dropping to 1.9%.
In the QE4 announcement, the Fed provided guidance for leaving the rates low: an unemployment level of 6.5% as long as inflation expectations remain under 2.5% for the next year or two.
It now seems that inflation is not a problem, at least not in the near future.
Further reading: A new world order in FX
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