Fed's inflation measure shows improvement but raises concerns over interest rate outlook

The Federal Reserve's preferred inflation measure showed better-than-expected results for November, easing some concerns about rising prices. However, this comes as the Fed raised its 2025 inflation forecast and lowered expectations for interest rate cuts. The Fed now projects core inflation at 2.5% for next year, up from 2.2% in September, remaining above its 2% target. This shift has led to increased forecasts for interest rates, now expected to reach 3.9% by the end of 2025. Wall Street reacted negatively, with the S&P 500 dropping 3% following the Fed's updated projections. The market continued to decline in premarket trading, indicating ongoing investor anxiety about monetary policy and inflation.