Inflation Cools as Price Hikes Ease, Rate Cuts Loom Even as Housing Issues Linger
-
Inflation has fallen steadily since peaking at 9.1% in June 2022, and is now near the Fed's 2% target. Goods prices are unchanged from a year ago.
-
Housing and rental costs are rising more slowly. Wage growth has also cooled, easing pressure on companies to raise prices.
-
The Congressional Budget Office estimates inflation will drop to 2.1% by end of 2023. But the Fed warns against declaring victory prematurely.
-
Fed officials now project interest rate cuts in 2023 rather than further hikes. Markets expect rate cuts could start as early as March.
-
Experts say the Fed's rapid rate hikes helped tame inflation without triggering a recession so far. But housing availability issues could still prolong elevated inflation.