Markets hope that the next US inflation rate report, which will be released tomorrow, will boost the situation and put an end to Federal Reserve rate hikes. Inflation data is the main factor influencing the decision for rates, according to the latest statements from the Fed’s members.
The personal consumption expenditures price index (PCE), the Fed’s preferred inflation gauge, is expected to have risen 0.1% in November. The PCE index rose 0.4% in September, matching the rise in August. The core PCE, which excludes food and fuel prices, is expected to have risen by 3.5% (Y/Y).
Federal Reserve Governor Christopher Waller said that if inflation continues to decline for several more months, it is possible to lower the policy rate. He added that if this happens, there is no reason to insist that interest rates need to remain really high.
At the same time, Federal Reserve Governor Michelle Bowman said that she remains willing to support raising interest rates “should the incoming data indicate that progress on inflation has stalled or is insufficient to bring inflation down to 2% in a timely way.”