A monthly Bureau of Labor Statistics report due Tuesday is set to show consumer prices were unchanged again in November, giving the Federal Reserve room to consider lower interest rates in the months ahead, according to Bloomberg Economics.

The consumer price index should benefit from a decline in energy prices last month, even if prices excluding food and energy rose faster than in October, Bloomberg economists Anna Wong and Stuart Paul said Monday in a preview of the figures.

“Short-term inflation expectations have come down sharply on lower energy prices in recent months,” Wong and Paul said. “That makes more room for the Fed to consider rate cuts as downside risks for activity and upside inflation risks become more balanced.”

Inflation has generally moderated in recent months at a faster pace than many forecasters inside and outside the Fed had expected, helping to fuel bets on rate cuts early next year.

While Fed officials have welcomed those developments, they’ve also cautioned that the path to their 2% inflation target may get bumpier in the coming months.

The Bloomberg economists predicted core goods prices registered declines in November for a sixth straight month, aided by a drop in used-car prices, though they added that “slow inventory rebuilding following the resolution of the United Auto Workers strike could temporarily slow the disinflation process for new cars.”

They also see a continued moderation in rental inflation in 2024, citing it as “the key driver of disinflation” in the year ahead.

“We expect to see core CPI inflation clocking just below 3%” in the first half of 2024, Wong and Paul said. “Unless the labor market cools more rapidly, chances are that inflation will stall at that level. Our baseline is that the economy is cooling — and the disinflation seen right now will persist as a result.”