Inflation cooled significantly in November, as the Consumer Price Index (CPI) rose 7.1% annually, down from 7.7% in October and much better than economists’ expectations of 7.3%. Despite the moderation in inflation, the Fed indicated raising interest rates through next year, with the key rate reaching roughly 5.1% or more. The Fed’s persistent hawkish stance could lead to the economy tipping into a recession.
Furthermore, the policymakers downgraded their outlook for economic growth in 2023 from the 1.2% forecasted in September to 0.5%. Consumers also pulled back on spending last month, with retail sales dropping 0.6%, even worse than the Dow Jones estimate for a 0.3% decline.
