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.

Although one single data point is never decisive, when inflation is high, the Fed generally raises interest rates to discourage borrowing, quell consumer spending and reduce the money supply. A tight labor market can also lead to a greater risk of inflation, putting more pressure on the Fed to hike rates.

The Federal Open Market Committee is most likely to cut interest rates again on December 18 to 4.25% to 4.5%, according to fixed income markets.

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.

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.

Prices rose 2.7% in the 12 months through November, in line with the consensus forecast from economists polled by The Wall Street Journal. That marke

Annual inflation in the United States may have ticked up last month in a sign that price increases remain elevated even though they have plummeted from their painful levels two years ago.

Fed-funds futures now point to a nearly 100% chance that Fed officials opt for another quarter-point cut next week.