The 7.7% year-over-year increase in October’s Consumer Price Index (CPI) had the markets breathing a sigh of relief yesterday in the hope of the Fed responding with a 50-bps rate hike in its December meeting. The indexes posted their biggest intraday gains in more than two years. The Dow surged 1200 points yesterday.
Since inflation is still far above the levels accepted by the Fed, the rate hikes are not expected to pause anytime soon. Additional rate hikes will only add to the misery of businesses already burdened by slowing down demand and high borrowing costs.
