Armed with consumer and wholesale inflation reports, Wall Street economists predict the Federal Reserve’s favorite price gauge will show just a mild increase in November and justify an interest-rate cut.

The Federal Open Market Committee started cutting interest rates in September and that process looks set to continue.

While the Federal Reserve is expected to cut its key interest rate next week, stubborn inflation could pressure the central bank to keep rate cuts few and far between next year.

The market sees the probability of another 25 basis point interest rate cut at next week's Federal Reserve meeting as rising despite inflation ticking higher in November.

Consumer inflation accelerated in November to 2.7% from 2.6% and core CPI was sticky at 3.3%. But a December Fed rate cut still looks like a sure thing.

Most stock markets in the Gulf ended higher on Thursday, in step with a global equity rally after U.S. consumer inflation data cemented bets of a Federal Reserve interest-rate cut next week.

Inflation in November rose modestly, with housing costs continuing to be a major factor in price increases. However, the Fed is expected to proceed with an interest rate cut next week.

Inflation data appear to have cemented the market’s view of a quarter-point rate cut next week, but beyond that they have provided little clarity. Traders now see a 99% chance of a cut on Dec.18, up from 71% a week ago,

Inflation is moving in the wrong direction. U.S. inflation picked up for a second straight month in November on a rise in food and gasoline prices, underscoring that the final stretch of the Federal Reserve's two-year battle against sharply rising prices has become more challenging.