Stocks rallied on Wednesday after December’s CPI print Finally some relief was shown in core inflation And investors calibrated bets on a Fed rate cut.
But the risk of sticky prices still looms A regime change in Washington when President-elect Donald Trump takes office next week. And economists largely agree that the battle to contain inflation is far from over.
“It hasn’t been stable on inflation,” Claudia Sahm, chief economist at New Century Advisors and a former Federal Reserve economist, told Yahoo Finance. Morning summary program “It’s been quite uneven.”
Although inflation has been slow, it has remained high Federal Reserve’s 2% target On an annual basis. High costs for shelter And key services like medical care and insurance have contributed to stubborn readings in recent months, leaving consumers feeling the pinch at the same time. At the grocery store And Even at the pump.
“I don’t think we’re completely out of the woods here,” Ed Yardeni, president of Yardeni Research, told Yahoo Finance. Market dominance overtime. “We have to remember that by the end of 2023, There were trends of disinflation. And then we get to 2024 and we see a bit of a reversal of that. “
Rising wages and a strong labor market have somewhat offset recent price pressures, but underlying trends show continued stickiness in categories that most households rely on. It makes the Fed work Also difficult to draw.
“It’s a bit of a breather to get some ‘no’ bad news,” Sahm said, citing December’s decline in core inflation and monthly core prices. But “it’s not really a game changer. It’s a lot more than we’ve seen month-to-month volatility combined.”
And volatility will likely rise with Trump taking office on Monday.
Trump’s proposed policies, such as higher tariffs on imported goods, tax cuts for corporations, and curbs on immigration, Seen as inflation. And those policies Can be more complicated Central Bank’s Path Ahead for Interest Rates
