In the wake of the soft CPI reading, economists are starting to talk about the Fed pausing after getting rates to a range of 4.5%-4.75%
The soft inflation reading in November has not caused economists to alter their expectations for the Federal Reserve’s meeting that ends Wednesday, but analysts are ripping up their script for what comes next.
“Stick a fork in it, inflation is done,” said Paul Ashworth, chief North America Economist for Capital Economics.Economists still think the Fed will hike its benchmark rate by a half percentage point, bringing its benchmark rate to a range of 4.25%- 4.5%. That is slower than the four straight 0.75 percentage point moves seen since June.In the wake of the November CPI reading, some economists think the Fed slows to a quarter-point move in February, bringing the target range to 4.5%-4.75%.
“We now think 25 basis points is more likely on Feb. 1 and we think that will be the final hike,” he added.“The 0.2% month-over-month increase in core consumer prices in November provides strong support to our long-held view that mounting disinflation will soon persuade the Fed to move to the side line after one additional 25 basis point hike in early February,” he said.
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