A third straight month of improvement in inflation data entails that economic conditions are improving. The inflation rate declined 0.1% sequentially and increased 6.5% year-over-year, indicating a sharp deceleration from the 7.1% rate in November and a 9.1% peak in June 2022.
This could lead the Federal Reserve to consider moderating the pace of its rate hike to restore price stability. After witnessing a slowdown in inflation, the U.S. rate futures market has priced in two 25-basis-point hikes in February and March.
