The U.S. inflation eased in December, supporting a moderation in the Fed’s rate hikes for the upcoming months. Buoyed by the December jobs report and signs of a slowdown in inflation, investors are eyeing a 25-basis-point hike at the Fed’s next policy meeting.
Nevertheless, the uncertainty prevails as the Fed, in its last meeting, vowed to keep rates higher throughout this year. While inflation has moderated over the past three months, Richmond Federal Reserve president Tom Barkin said, “Inflation is going to be more persistent than a simple drop down to 2%.” This implies that rates could stay at a restrictive level longer than anticipated.
