The Fed's preferred measure of inflation rose just 0.2% from November to December, its lowest level in nearly three years.
The latest data on the Personal Consumption Expenditure Price Index (also known as “core inflation,” which subtracts food and energy costs) is likely to whet the appetite of Wall Street investors hoping for a Fed rate cut this year.
“The big picture is that the Fed doesn't need to worry because faster economic growth won't stimulate inflation,” said Sonu Varghese, global macro strategist at Carson Group. he told CNBC.
“We expect a rate cut in 2024.”
Compared to the same month last year, so-called “core” prices rose by 2.9% in December, the smallest increase since March 2021.
Economists believe that core prices are a better measure of the expected path of inflation.
The subsidence in inflation comes amid further good news for the US economy.
The country's economy grew at an unexpectedly fast pace of 3.3% annually from October to December as Americans continued to show a willingness to spend freely despite high interest rates and price levels that are frustrating many households. I grew up in
Thursday's Report from the Department of Commerce Gross domestic product, the economy's total output of goods and services, slowed from the previous quarter's impressive 4.9% growth rate, he said.
Robust consumer spending boosted growth, ending a year that began amid widespread expectations of a recession.
Rather, the economic growth rate in 2023 was 2.5%, up from 1.9% in 2022.
Even though inflation has subsided, Fed officials are cautious about declaring victory over soaring prices.
Investors are hoping for a rate cut, but central bankers are likely to keep rates on hold when they meet next week.
On Wall Street, stocks were flat on Friday morning despite a strong week for major indexes.
The S&P 500 and Nasdaq rose more than 1% for the week, while the Dow rose 0.6%.
with post wire
