U.S. consumer prices are expected to have risen at their fastest pace in a year and a half in November, a development that would reinforce growing concerns about affordability pressures facing American households and keep the Federal Reserve cautious on further interest rate cuts.

Economists polled by Reuters estimate that the Consumer Price Index (CPI) climbed 3.1% year-on-year in November, up from 3.0% in September and the strongest increase since May 2024. If confirmed, the data would signal that the slowdown in inflation seen earlier in the year has lost momentum, even as policymakers had hoped price pressures were easing sustainably.

The November figures, however, come with unusual complications. The Labor Department’s Bureau of Labor Statistics (BLS) will publish only year-on-year inflation rates when it releases the delayed CPI report on Tuesday, after a 43-day government shutdown disrupted data collection. Month-to-month price changes will not be available, and the October CPI report was canceled entirely because prices could not be collected retroactively.

The shutdown has already made history, with the government failing to publish an unemployment rate for October for the first time ever. While the BLS said it will release some additional price indexes that do not rely on in-person data collection, it cautioned that “the number of publishable indexes will be small,” and acknowledged it “cannot provide specific guidance to data users for navigating the missing October observations.”

As a result, economists are urging caution in interpreting the data, advising analysts and investors to focus on year-on-year trends or two-month changes rather than short-term movements.

“Downward inflation progress has stalled,” said Andy Schneider, senior U.S. economist at BNP Paribas. “This largely reflects companies in goods-producing sectors passing tariff costs through into prices.”

Tariffs imposed under President Donald Trump’s trade policy have increasingly become a central factor in the inflation narrative. While the impact was initially muted as businesses ran down inventories accumulated before the duties took effect or absorbed some of the costs themselves, economists say that strategy is nearing its limits.

“Retailers are in the middle of the process of pushing tariffs onto consumers, and had passed on about 40% of the total by September,” said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. “We expect that proportion to climb gradually to 70% by March and then stabilize.”

That shift is expected to weigh most heavily on lower-income households, who typically have little savings to cushion higher prices and have seen slower wage growth compared with higher earners. Economists say this dynamic is amplifying the political sensitivity of inflation, which remains one of the most visible economic issues for voters.

Trump, who won the 2024 presidential election after campaigning on promises to rein in inflation, has in recent weeks offered mixed messaging, alternately dismissing affordability concerns, blaming his predecessor Joe Biden, and pledging that Americans will begin to see the benefits of his policies next year.

The November CPI could still come in below expectations, some economists caution, because the delayed data collection may have captured a period later in the month when retailers rolled out holiday discounts. That effect could show up in categories such as furniture and recreational goods.

“November CPI this year could capture a period that more heavily reflects holiday season discounts than a usual November,” said Veronica Clark, an economist at Citigroup. “If there is some abnormal weakness in November goods prices, there could be a larger rebound in these components in December.”

Core inflation, which strips out volatile food and energy prices, is expected to rise 3.0% year-on-year in November, matching September’s pace. Higher rents and goods prices are likely to keep core inflation elevated, though declines in airfares and hotel and motel rates could provide some offset.

Federal Reserve officials remain focused on inflation measures tied to the Personal Consumption Expenditures (PCE) index, which underpins the central bank’s 2% target. Those figures are also facing delays. October’s Producer Price Index report was canceled, November’s PPI is now due in mid-January, and the government has yet to announce a new release date for November’s PCE data. Both headline and core PCE inflation were well above target in September.

Against this backdrop, the Fed last week cut its benchmark interest rate by 25 basis points to a range of 3.50% to 3.75%, but signaled that further reductions are unlikely in the near term. Policymakers say they need clearer evidence that inflation is moving decisively lower and that the labor market remains on solid footing.

Fed Chair Jerome Powell was blunt about the source of recent price pressures, telling reporters that “it’s really tariffs that are causing most of the inflation overshoot.”

Some relief could eventually come from the White House’s decision to roll back duties on a limited number of goods, including beef, bananas, and coffee. Economists warn, however, that price reductions tend to lag policy changes and may not be immediately visible to consumers.

“With the tendency for firms to revisit pricing decisions at the start of the calendar year, we see the potential for another burst of goods inflation in the first quarter,” said Sara House, senior economist at Wells Fargo.

Currently, the November inflation report is expected to confirm what many households already feel: price pressures remain stubborn, policy uncertainty is high, and the path back to stable, broadly affordable prices is proving slower and more uneven than hoped.

Japan’s central bank is preparing to cap the year with one of its most consequential policy decisions in a generation, as investors brace for a rate hike that would take borrowing costs to levels not seen since the mid-1990s and accelerate the country’s long-delayed exit from ultra-loose monetary policy.

The Bank of Japan began its final policy meeting of the year on Thursday, with a decision due on Friday. Markets have largely priced in a hike, with LSEG data showing an 86.4% probability that the benchmark rate will be raised to 0.75%, the highest since 1995. The move would reinforce the normalization path the BOJ laid out last year after scrapping its negative interest rate regime, which had been in place since 2016.

The case for tightening has been built on stubborn inflation. Consumer prices have remained above the BOJ’s 2% target for 43 consecutive months, eroding purchasing power and keeping pressure on policymakers to act. A rate increase would also be expected to support the yen, which has been under sustained pressure against the dollar, and help contain imported inflation.

Yet the decision comes at a delicate moment for the broader economy. Revised GDP figures showed that Japan’s economy contracted more sharply than initially thought in the third quarter, shrinking 0.6% quarter on quarter and 2.3% on an annualized basis in the three months through September. That weakness has raised concerns that higher borrowing costs could further slow growth just as the government rolls out fresh stimulus to revive demand.

With a hike widely anticipated, attention has shifted to the BOJ’s messaging. Investors are expected to parse Governor Kazuo Ueda’s comments for clues on how far rates could ultimately rise and how quickly future moves might come. The so-called neutral or terminal rate — the level that neither stimulates nor restrains the economy — remains a key unknown.

Ueda has previously acknowledged the uncertainty. Earlier this month, he told Japan’s parliament that the central bank estimates the neutral rate to lie somewhere between 1% and 2.5%, a wide range that underscores the difficulty of guiding policy with precision.

“Unfortunately, the neutral rate of interest is a concept for which we can only produce an estimate with quite a wide range,” Ueda said, adding that policymakers must continue to operate without full clarity on that benchmark.

Carl Ang, fixed income research analyst at MFS Investment Management, said markets may gain further insight after Friday’s meeting, possibly through updated projections or more detailed guidance on the BOJ’s longer-term thinking.

The pace of future hikes remains a point of debate. ING said this week that while markets are leaning toward another increase in June 2026, it sees October as a more likely timing. Bank of America, by contrast, expects a June hike and does not rule out an earlier move in April if the yen weakens rapidly, projecting the terminal rate to reach about 1.5% by the end of 2027.

Political dynamics are also in focus. Prime Minister Sanae Takaichi, who took office in October, had during her leadership contest staunchly opposed BOJ rate hikes, arguing that premature tightening could derail the recovery. Since assuming office, however, she has softened that stance, signaling a more pragmatic approach as inflation proves more persistent and currency pressures intensify.

The shift has eased some concerns about friction between the government and the central bank as normalization proceeds.

Higher rates carry clear fiscal implications. Rising borrowing costs will push up bond yields and increase debt-servicing expenses for the Japanese government, which has already unveiled its largest stimulus package since the Covid-19 pandemic in an effort to shore up the economy. Japan’s debt burden remains among the highest in the developed world, making the trajectory of yields a sensitive issue.

Nikkei reported earlier this month that Japan’s borrowing costs could double if benchmark yields climb to 2.5% from around 2% currently. Yields on 10-year Japanese government bonds are already hovering near 18-year highs, last trading at about 1.971%. Should yields reach 2.5%, interest payments by the government would rise sharply, jumping to an estimated 16.1 trillion yen in fiscal 2028 from 7.9 trillion yen in fiscal 2024, according to the report.

Currency markets remain another source of uncertainty. The yen has traded in a weak range of roughly 154 to 157 per dollar since November, and has fallen more than 2.5% since Takaichi took office. While the BOJ has largely avoided direct commentary on the exchange rate, any explicit remarks from Ueda could be interpreted by markets as a signal of discomfort with further yen weakness.

Ang noted that fiscal concerns and the possibility of intervention by the finance ministry — something Finance Minister Satsuki Katayama has not ruled out — could temper the currency’s response to higher rates. Taking those factors into account, he expects the yen to trade in a range of 150 to 160 against the dollar next year, even as policy tightening continues.