Notes from the Desk | US CPI – Heading in the Right Direction Dec 13 2022

Notes from the Desk | US CPI – Heading in the Right Direction

US CPI decelerated by more than forecast as the recent drop in energy prices offset higher food costs.

• YoY CPI – 7.1% vs 7.3% expected
• YoY core CPI – 6% vs 6.1% expected

 

Implications:

With inflation still far above 2% and labour markets tight, we expect the Federal Reserve to raise rates by 50bps tomorrow.  Equities and bond markets are reacting positively to the news as they anticipate that the rate hike cycle is drawing to a close.