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Thursday's inflation report could challenge the market outlook for big Fed rate cuts
ECONOMY
Thursday’s inflation report could challenge the market outlook for big Fed rate cuts
PUBLISHED WED, JAN 10 2024 3:02 PM EST | UPDATED WED, JAN 10 2024 9:52 PM EST
Jeff Cox
@JEFF.COX.7528 https://facebook.com/jeff.cox.7528
@JEFFCOXCNBCCOM https://twitter.com/JeffCoxCNBCcom
KEY POINTS
• The consumer price index is projected to have risen 0.2% in the final month of 2023, or 3.2% for the full year.
• There is a wide gap between what the Fed has indicated in terms of rate cuts and what the market is expecting.
• The Fed’s central mission now is calibrating policy in a way that it doesn’t ease too much and allow inflation to return or hold policy too tight so that it causes a long-anticipated recession.
Economists expect that inflation nudged higher in December, a trend that could call into question the market’s eager anticipation that the Federal Reserve will slash interest rates this year.
The consumer price index, a widely followed measure of the costs folks pay for a wide range of goods and services, is projected to have risen 0.2% in the final month of 2023, or 3.2% for the full year, according to Dow Jones.
At a time when the Fed is fighting inflation through tight monetary policy including elevated rates, news that prices are holding at high levels could be enough to disrupt already-fragile markets.
“The Fed did its policy pivot, and the data’s got to support that pivot,” said Jack McIntyre, portfolio manager at Brandywine Global Investment Management. “The market seems to have gotten excited that the Fed’s going to have to do more than what the Fed thinks in terms of rate cuts now. … The market got ahead of itself.”
{snip}
Thursday’s inflation report could challenge the market outlook for big Fed rate cuts
PUBLISHED WED, JAN 10 2024 3:02 PM EST | UPDATED WED, JAN 10 2024 9:52 PM EST
Jeff Cox
@JEFF.COX.7528 https://facebook.com/jeff.cox.7528
@JEFFCOXCNBCCOM https://twitter.com/JeffCoxCNBCcom
KEY POINTS
• The consumer price index is projected to have risen 0.2% in the final month of 2023, or 3.2% for the full year.
• There is a wide gap between what the Fed has indicated in terms of rate cuts and what the market is expecting.
• The Fed’s central mission now is calibrating policy in a way that it doesn’t ease too much and allow inflation to return or hold policy too tight so that it causes a long-anticipated recession.
Economists expect that inflation nudged higher in December, a trend that could call into question the market’s eager anticipation that the Federal Reserve will slash interest rates this year.
The consumer price index, a widely followed measure of the costs folks pay for a wide range of goods and services, is projected to have risen 0.2% in the final month of 2023, or 3.2% for the full year, according to Dow Jones.
At a time when the Fed is fighting inflation through tight monetary policy including elevated rates, news that prices are holding at high levels could be enough to disrupt already-fragile markets.
“The Fed did its policy pivot, and the data’s got to support that pivot,” said Jack McIntyre, portfolio manager at Brandywine Global Investment Management. “The market seems to have gotten excited that the Fed’s going to have to do more than what the Fed thinks in terms of rate cuts now. … The market got ahead of itself.”
{snip}