News & Insights

The first Consumer Price Index release of the year showed that inflation is continuing to ease for the sixth consecutive month — an enormous sigh of relief for both consumers and investors, dropping to 6.5% in December. This is the smallest 12-month increase since the period ending October 2021.

The question remains whether the latest CPI data might give the Federal Reserve reason enough to ease its pace of rate hikes. The sentiment is echoed by several experts, who say that this modest cooling down of still-too-hot inflation should support the Fed’s projected terminal rate which is currently estimated at 5 to 5.25%.

“We expect the Fed to raise rates by 25 basis points in the next two meetings, giving the market a chance to digest the rate hikes of the past year,” said Mace McCain, President, Managing Director and CIO at Frost Investment Advisors.

Excerpted from GOBankingRates on January 12, 2023. To read full article, click here.