Inflation closed out 2022 in a modest retreat, with the consumer price index (CPI) accelerating 6.5% year-over-year in December, down from 7.1% in November and a 9.1% peak hit in June last year. Despite the significant slowdown in price increases, inflation continues to hover way above the Fed’s target of 2%.
According to Richmond Fed president Thomas Barkin, with the inflation slowing down considerably, the central bank doesn’t need to increase interest rates as aggressively as it did last year. However, he warns of still-high median inflation and sees the rate path as “slower, but longer and potentially higher.”
