The U.S. dollar fell sharply on Tuesday after data showed U.S. inflation fell more than expected in November, paving the way for more modest action by the U.S. Federal Reserve, Reuters and Agerpres reported.

By 13:35 GMT, the dollar was down 1.05% at $1.0649 per euro, and was also down significantly against the British pound and the Japanese yen.

Inflation slowed more than expected in November to a 7.1% year-over-year increase after rising 7.7% in October, according to consumer price index data released Tuesday by the U.S. Labor Department.

Compared to the previous month, prices rose just 0.1% in November, following a 0.4% rise in October.

Analysts polled by MarketWatch had forecast annual inflation at 7.3% and a 0.2% month-on-month price increase.

Inflation is slowing in the United States

The annual rate of inflation has started to slow down as the effects of rising prices since the end of last year have started to dissipate.

In addition, the Federal Reserve’s policy of aggressively raising interest rates is also starting to weigh on demand.

The November inflation data was released as US Federal Reserve officials gather for their final monetary policy meeting of the year.

Analysts expect Fed officials to decide whether to raise borrowing costs by 50 basis points on Wednesday after four consecutive hikes of 75 basis points each.

Fed Chairman Jerome Powell said last month that the US central bank could start reducing the scale of rate hikes “as early as December.”

US President Joe Biden has said since May that overcoming a period of high inflation is his highest national priority, but so far the results in this regard have been questionable.