(Bloomberg) -- Here’s a roundup of economists’  and strategists’ reaction to the US consumer price data for November released Tuesday and how they see the report affecting Federal Reserve monetary policy. 

Lindsay Rosner, multisector portfolio manager at PGIM Fixed Income, said this was an “important piece of the story of rate hikes working.” She called it the “first really meaningful beat.”

Florian Ielpo, head of macro research at Lombard Odier Asset Management, said this is the first time core inflation is showing a decline. “This is consistent with a large cross-section of data in the US now: Inflation in the US is likely to be a problem of the past.”

For Dave Lutz of JonesTrading, the print says one thing: The worst of inflation has likely passed. He adds that this validates an anticipated slowing in the pace of Fed interest-rate hikes.

“Stick a fork in it, inflation is done,” said Paul Ashworth at Capital Economics. “The 0.2% m/m increase in core consumer prices in November provides strong support to our long-held view that mounting disinflation will soon persuade the Fed to move to the side line after one 25 basis-point hike in early February.”

Bloomberg Intelligence Chief US Rates Strategist Ira Jersey said the better-than-expected core CPI number gives the Fed the cover it needs to signal hikes will be coming to an end. “However, we still think the Fed will signal it will maintain rates near the peak for longer than the market is pricing, which means the front-end knee-jerk rally may not have legs, while the long end may retest recent yield lows flattening the curve a bit further, ” he said.

Here’s Rubeela Farooqi, chief US economist at High Frequency Economics, on the door opening toward stepping down possibly to 25 basis points next year: “Overall, prices are moving in the right direction, although annual rates of change remain elevated, well above the 2% target. In terms of the upcoming rate decision, a deceleration will be welcome news and will support a slower pace of rate hikes going forward,” she said. “We expect the FOMC to raise the target range by 50 basis points tomorrow. Further sustained improvement over coming months could see the Fed downshift further over coming meetings.”

Ian Lyngen of BMO Capital Markets said, “we’re on board with the steepening in 5s/30s as this print suggests a materially higher terminal rate may not be required, and from here this afternoon’s long bond auction will serve as a minor distraction ahead of the Fed tomorrow and the all-but-assured 50 bp hike.”

April LaRusse, head of investment specialists at Insight Investments, said the slightly softer CPI numbers are almost entirely driven by the retracement we have seen in food and energy prices. “With global growth decelerating, it is not a surprise to see these components rolling over first. The key thing to watch is core service inflation, which has yet to moderate. Without services and wages under control, we are not out of the woods yet on inflationary risks,” LaRusse said.

Omair Sharif, founder of Inflation Insights LLC said the 0.2% core print might overstate the softness in core inflation modestly. “But I’ll repeat what I said after the October CPI: This is not an outlier. In fact, today’s report showed a fairly broad-based slowdown, and core CPI ex-shelter was -0.13%.”

Katherine Judge of CIBC Capital Markets warns that we’re not out of the woods yet on inflation. The economist flags that the deceleration in price pressures “was concentrated in a few components, and the labor market remains tight.”

“The softer core reading was driven by an easing in core goods prices, specifically used cars, reflecting supply-chain improvements, and drops in medical care and transportation services. That masked price pressures in core services, with the shelter sub-index continuing to increase strongly, although the pace of monthly shelter increases subsided,” Judge said.

Jason Pride at Glenmede also struck a cautionary tone about today’s market reaction: “Investors should be careful not to over-extrapolate these results and temper their expectations for a premature pivot from the Fed. Consumer inflation is still far from the Fed’s price stability goals, and the 1970s provide case-in-point as to the risks of claiming victory on inflation too early.”

Morgan Stanley’s US economists, led by Ellen Zentner, said that from here on out the labor market may become the key metric, rather than CPI: “With the downtrend in inflation becoming entrenched, the FOMC can set its sights squarely on the labor market. In our forecasts, a slowdown in jobs growth over the coming months sets the stage for, first, a further step down to a 25 basis-point increase in the February meeting. As jobs growth trends towards the 100,000 mark, we expect no further interest rate hikes at the March FOMC, leaving the peak fed funds rate at 4.625%.”

For more on US CPI report for November, click here for our TOPLive blog.

--With assistance from Joe Richter and Michael MacKenzie.

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