11 Nov 2022
CPI Report October 2022
On the 10th of November, the latest CPI data was released - adding some extra volatility to an already volatile week.
You thought this week wouldn't have any more news. You felt after the FTX debacle, you could step away from the screens, and touch grass, didn't you? You thought you were done seeing Sam memes? Well, you guessed WRONG!
Consumer Price Index (CPI) data was released today. It showed that inflation cooled more than expected in October, a hopeful development for Americans and a possible start for slowing down the rate hikes (don't get confused with pivoting, they are simply slowing rate hikes down).
While price increases are still rapid and painful for many households, they are finally showing signs of turning a corner. The Y-o-Y CPI index came in at 7.7 percent in October; the expectation for October was 7.9 percent and down from 8.2 percent in the year through September.
The report provides early evidence that the Fed’s campaign to slow rapid inflation may be combined with supply chain healing to ease price pressures. The central bank has lifted interest rates from near zero to nearly 4 percent this year as it tries to slow consumer and business demand and give supply a chance to catch up.
Some Federal Reserve officials had this to say:
FED’S MESTER: October CPI shows signs of moderation in inflation; it is unclear how high the rate hikes must go and how we will have a tightening policy. Returning to stability will take time, and it will bring pain.
FED's DALY: CPI report was good news, but one month of data is insufficient. a 7.7% inflation report is far from a victory, and pausing rate hikes is not a subject of discussion. The FED will likely raise rates again in the future.
Inflation data will not slow down; it is one of the most significant talking points around the world. I expect to see inflation around the globe slowly decrease over time.
We must ask ourselves, as investors, when does the fed start pivoting?
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