Fed’s Goolsbee: December services inflation was a little more favorable than expected

  • 2023 was a ‘hall of fame’ year on inflation reduction
  • Overall CPI inflation in Dec was pretty close to what was expected
  • Housing inflation was a little less favorable than expected
  • Persistently high shelter inflation CPI may have less implication for Fed’s personal consumption expenditures target
  • Inflation will be the primary determinant of when and how much interest rates should be cut
  • The Fed still has weeks and months of data to come
  • Can’t answer the question of what we’ll do at March meeting without data
  • Fed so far is on golden path, though it could be derailed
  • Unlike a year ago, the risks to golden path are on both sides
  • Risks include persistent housing inflation, potential supply shocks

If you would have given me the CPI numbers and today’s schedule of speakers, I probably would have expected something more hawkish. But all three of them have been dismissive of the higher inflation.

This article was written by Adam Button at www.forexlive.com. Source