The December inflation report had some encouraging news. It showed that consumer prices trended lower for the month, but more importantly, it confirmed that overall prices have been trending lower for the past six months.
Now the ball is in the Fed’s court. The Fed Governors need to determine how much further they need to go with higher interest rates, which have been used to slow the economy and tame inflation.
After the inflation report was released, traders quickly adjusted their outlook for what the Fed will do next.
In the table, you can see the traders now see short-term rates reaching a high of between 4.75% and 5% in 2023. Late last year, some feared that the “terminal” rate would be over 5%. Today, rates are between 4.25% and 4.5%
After reviewing inflation and other economic data, if the Fed concludes that it’s time to pivot on monetary policy, that decision would be expected to influence both the stock and bond markets. I’m keeping an eye on what's going on with the Fed and will continue to provide you updates.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2023 FMG Suite.
Inflation Is Trending Lower. Now What?
January 25, 2023