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Fed's Prefered Inflation Gauge Approaches Target

In November, the Federal Reserve's primary measure for core inflation, which is closely monitored for policy decisions, showed a minimal increase of 0.1% month over month. Compared to the same period last year, this measure of underlying inflation increased by 3.2%, still trailing the target of 2%, but sharply lower than the 4.6% yoy beginning of the year. The 6month annualized rate is now at 1.9%, the first time below 2% in the last 3 years.

Our take: This provides further confirmation that inflation is swiftly declining toward the central bank's target, signaling the potential end of the rate hike cycle. Concurrently, the real policy interest rate is rising at a similar pace, indicating that it may be some time before we experience a more relaxed (real) monetary policy. #Federal Reserve #Inflation Rate #Monetary Policy #Economic Trends


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