Inflation is showing signs of easing, with the Consumer Price Index (CPI) dropping for the sixth consecutive month in December. CPI increased 6.5% year-over-year in the month, down from its peak of 9.1% in June last year.
Despite a significant moderation in inflation, the central bank might keep raising interest rates this year since inflation is much higher than its 2% target. Fed’s James Bullard favors raising interest rates above 5% ‘as soon as possible’ to ensure that price pressures are subdued. Continued rate hikes could trigger an economic downturn, potentially pushing the economy into a recession.
