**As seen in Risk In The Week report 01/19/24, subscribe at cablefxm.co.uk/reports
The Fed's favorite measure of inflation slowed in November to 3.2% Y/y from the prior 3.4%, the consensus had seen the metric at 3.3%. Economists' core PCE deflator expectations have been missed consecutively since July. December data was likely welcomed by the FOMC as the core PCE is now at its lowest level since April 2022. However, recent Fed speakers have raised concerns on the price path and would like to ensure the 2% target will be met before easing policy. Fed's Mester said that March seems too early for a rate cut, and Fed's Waller warned that there is no reason to lower policy as rapidly as in the past. Behind their reasoning could be the December SEP which sees inflation slowing to 2.4% in 2024 and to 2.2% in 2025. Analysts at ING said that the M/m core PCE should print below 0.2% in December for the sixth month out of the last seven. ING noted this is a key threshold for the Y/y figure to return to 2%.
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