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.

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.

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

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.

U.S. inflation ticked higher in November while core price pressures held at multiyear lows, potentially completing the picture for the Federal Reserve's end-of-year interest-rate decision next week. The Commerce Department said its headline Consumer Price Index for November was pegged at an annual rate of 2.