A year after the Feds’ aggressive interest rate hikes to curb sky-high inflation, the Consumer Price Index (CPI) for December increased 6.5% year-over-year. It decreased 0.1% over the prior month, slowing for the sixth consecutive month. This raised investor confidence, signaling that the Fed’s rate hikes are having the intended effect.
However, since the current inflation rate is still far more than the target, the central bank has given indications of continuing hikes at a slower pace until inflation falls below 2%. Post CPI report, the market is pricing a 0.25 percentage point rate increase next month.
