The inflation figures published on Thursday in the US increased the Expectations that the Federal Reserve will move from 50 basis point rate hikes to 25 basis point rate hikes. Wells Fargo analysts warn that, even though inflation has clearly slowed from the pace of early 2022, they doubt the FOMC is prepared to declare mission accomplished.
Trend, but not mission accomplished
“Headline inflation has fallen 2.6 percentage points since June, and the annualized run rate over the past three months is just 1.8%, showing that a further slowdown in the year-over-year turnaround is yet to come.” Further gains should be made in the coming months as property inflation remains subdued and the lagged effect of lower housing cost growth eventually spills over into CPI data. the days of 75 basis point rate hikes by the FOMC look fine in the rear view mirror.”
“While Fed officials have acknowledged recent progress and should welcome this report, as do we, remain skeptical that inflation will easily return to 2% once the property and housing correction is over. The increasingly compelling evidence of slowing inflation from today’s report the chances increase that the FOMC will raise the fed funds rate by as little as 25 basis points at its next meetingbut with the inflation trend still above the target, we expect that even if the FOMC slows down, it will continue to tighten beyond its next meeting.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
