USA: inflation slightly decreasing, this does not necessarily push the FED to act
Inflation continues to decline in the US. The headline CPI in the US is expected to have stabilized on a monthly basis thanks to lower energy prices, and the annual figure rose from 3.2% to 3.1% in November. While all components, except housing, aim for only +1.4%, housing leads the price trend upwards.
Core inflation is seen at 4%, still high for FED decision makers, and remains double the FED's target . These numbers certainly look better than those in 2022, when core U.S. inflation reached 6.6%, and also remained slightly higher than market expectations of 3%. As Fed Chair Powell will surely say tomorrow, progress in the Fed's fight against inflation is encouraging, but the work is not done yet. Meanwhile, let's see the short-term inflation graphs:
In a twenty-five year horizon
Here is the core inflation figure, which is unchanged
Given that the entire tightening of monetary policy is aimed at fighting inflation, a series of softer than expected inflation data could give further impetus to the Fed's "doves", but much will also depend on employment data and, in any case , we will know tomorrow what the board thinks.
While the Fed is pleased with the current results – declining inflation despite healthy labor market easing and fairly resilient growth – Powell won't talk about success on inflation, at least this week. As we said, the labor results are positive and Core inflation, influenced by wages, is still at last month's levels and has not fallen. Therefore, the Fed is likely to be satisfied but cautious, regardless of what we see in today's inflation data.
Thanks to our Telegram channel you can stay updated on the publication of new Economic Scenarios articles.
The article USA: inflation slightly falling, it is not certain that this will push the FED to act comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/usa-inflazione-in-leggero-calo-non-e-detto-che-questo-spinga-la-fed-ad-agire/ on Tue, 12 Dec 2023 15:53:32 +0000.