Data released Thursday in the United States confirmed a slowdown in inflation, with the CPI annual rate falling to 6.5%, the lowest level since October 2021. Bill Diviney, Chief Economist at ABN-AMRO notes that falling inflation paves the way for a 25 basis point Fed rate hikeinstead of a rise of 50 basis points.
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“The drop was largely due to the impact of the drop in oil prices in gasoline pricesbut they were also influenced by continued falls in the prices of used cars and the weak inflation of medical services. By contrast, housing inflation and other components of services inflation remained elevated, as expected.”
“Inflation continues to show a downward trendin line with our baseline assumption, and this should give the Fed confidence to continue to reduce the rise of 25 basis points when the FOMC meets again in early February. In the near term, we expect the fall in gas utility prices, as a result of the mild winter and lower wholesale gas prices, to further curb headline inflation.”
“Regarding core inflationalthough annual inflation should continue to decline, we may see some pick-up in MoM price growth in the near termsince a significant drag in recent months has come from the drop in wholesale prices for used cars, which for now seems to have stabilized.”
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.
