Inflation Cools Substantially in Early 2023, Raising Hopes for Fed Rate Cuts Later This Year

Inflation peaked at 9.1% in June 2022 but cooled to 3.2% by February 2023, putting it on track to reach Fed's 2% target.

Housing inflation lagging at 5.7% annually in February; it needs to come down before Fed will cut interest rates.

Fed held rates steady in 5.25-5.5% range in February after 11 hikes over prior 16 months. Rate cuts expected this year if inflation keeps dropping.

Jobs report and March CPI data this week important to determine likelihood of Fed rate cuts in 2023.

Chicago Fed President credits Fed policy for reducing inflation substantially in 2023 without triggering a recession so far.