Phil Orlando, chief stock market strategist at Federated Hermes, shares his expectations for the path of inflation this year.
What is attracting attention as a countermeasure against inflation is federal reserve It rose in December after falling the previous month as high prices continued to weigh on millions of Americans.
According to the Department of Labor, consumer prices rose 0.2% from the previous month, according to the Personal Consumption Expenditure (PCE) Index. On an annual basis, prices remained unchanged from the previous month, rising by 2.6%.
Both numbers were in line with Refintiv economists' expectations.
In a sign that the Fed's fight against inflation is making gradual progress, core prices, which exclude more volatile measures of food and energy, rose 0.2% from the previous month and 2.9% from a year earlier. This was the highest core inflation rate since 2021.
Americans are withdrawing money from their retirement accounts to cover living expenses
Customers shop at a supermarket in Foster City, California, on September 13. (Li Jianguo/Via Xinhua/Getty Images)
The Fed is targeting the PCE key figure as it seeks to return consumer prices to 2%. Chairman Jerome Powell He previously told reporters that core data is actually a better indicator of inflation. Both core and headline numbers show that inflation is steadily returning to the Fed's recommended 2% target.
“The inflation trajectory is improving, giving the Fed room to cut rates this year,” said Jeffrey Roach, chief economist at LPL Financial. “But the Fed has more work to do and should not be tempted to declare 'mission accomplished.'
Fed moratorium likely won't help struggling consumers
Other statistics included in the report showed consumer spending rose 0.7% in December compared to a 0.4% increase in November, suggesting Americans increased spending during the crucial holiday season. are doing.
Federal Reserve Chairman Jerome Powell spoke at a press conference in Washington, DC, on March 22nd. (Al Drago/via Bloomberg/Getty Images)
Still, many economists expect spending to slow in coming months as consumers continue to grapple with expensive goods, high interest rates and the reopening of the economy. federal student loan payments.
Stocks were little changed Friday morning as investors digested the latest inflation report.
| ticker | safety | last | change | change % |
|---|---|---|---|---|
| Me: DJI | Dow Jones Average | 38107.04 | +57.91 | +0.15% |
| I: Comp | Nasdaq Composite Index | 15481.279042 | -29.22 | -0.19% |
| SP500 | S&P500 | 4892.38 | -1.78 | -0.04% |
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of The Fed has decided not to raise interest rates At its December meeting, it was decided to raise interest rates by a quarter of a point three times next year, effectively bringing an end to the nearly two-year tightening campaign. Policymakers are widely expected to keep interest rates on hold at their first meeting of the year on January 30-31.
“There's little chance the Fed will cut rates next week,” said Elizabeth Renter, a data analyst at NerdWallet. “If anything, we will continue to see Fed Chairman Jerome Powell's comments continue to take a slight turn toward a dovish direction, with an eye toward a potential rate cut in March or June.”
