According to data released by the Commerce Department, the Consumer Price Index (CPI) increased 6.5% year-over-year last month, lower than 7.1% in November. Inflation declined for the sixth consecutive month after peaking at 9.1% annually in June. Therefore, the Federal Reserve will likely lower its interest rate hike at its upcoming FOMO meeting.
Investors broadly expect the Fed to increase rates by 25 basis points (bps) this Wednesday, a downshift from a 50-bps hike in December. Fed Governor, Christopher Waller, has joined other policymakers in backing the slowdown in the next rate hike to 25 bps but anticipates continued tightening going forward to curb inflation and bring it close to the central bank’s 2% target.
