The December CPI moderated for the sixth consecutive time as prices rose 6.5% year-over-year. Post CPI report, a 25-basis-point rate hike is expected at the Fed’s February meeting, and this slowdown in the rate hikes could bode well for the stock market.
However, rate hikes could continue throughout 2023, although at a reduced pace, until the inflation rate drops below 2%. This could tip the economy into a recession. Although the market expects rates to peak at 4.9% mid-year, JPMorgan Asset Management's chief investment officer Bob Michele has predicted them to ultimately reach 6%, which could result in at least a mild recession.
