To hike or not to hike?
With inflation slower than expected, investors and Wall Street economists are confident the Federal Reserve will finish raising interest rates at least through the end of the year.
Immediately after the data was released, the market was pricing in a nearly 100% chance that the Fed would keep interest rates unchanged in December, according to data from CME Group.
“October’s CPI was weak for services, and these November results do not meet our previously established criteria for another rate hike in December,” said Ellen Zentner, chief economist at Morgan Stanley. Deaf,” he said. “We believe the Fed will continue to hold policy due to moderate inflation and still-tight financial conditions.”
Still, that doesn’t mean central banks can still declare victory over inflation.
Michael Pearce, chief U.S. economist at Oxford Economics, said that non-shelter-in-place inflation rose just 0.3% month-on-month in October, adding: “There are signs that services inflation is stagnant, reflecting a tight labor market.” , services inflation could return to inflation.” We are still far from the 2% target. ”
“Overall, the October CPI report gives Fed officials confidence that inflation is firmly on a downward trajectory and should hold off on raising rates further,” Pierce continued.
“However, the disinflation process will still take time, and the path to slowing services inflation depends on continued cooling of labor market conditions, so by the time the Fed can consider lowering interest rates. It will still take a long time.”