Inflation Is Trending Lower. Now What?
Offered by Rob Taylor
The December inflation report had some encouraging news. It showed that consumer prices trended lower for the month, but more importantly, it confirmed that overall prices have been trending lower for the past six months.
After the inflation report was released, traders quickly adjusted their outlook for what the Fed will do next.
In the table, you can see the traders now see short-term rates reaching a high of between 4.75% and 5% in 2023. Late last year, some feared that the “terminal” rate would be over 5%. Today, rates are between 4.25% and 4.5%
After reviewing inflation and other economic data, if the Fed concludes that it’s time to pivot on monetary policy, that decision would be expected to influence both the stock and bond markets. I’m keeping an eye on what's going on with the Fed and will continue to provide you updates. As always, if you have any questions or concerns, give us a call!
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