Economics & Growth | Monetary Policy & Inflation
November 2022 CPI: Inflation trends Remain Strong
- By Dominique Dwor-Frecaut
- 4 min read
Summary
- The normalization of used car prices and energy price deflation are masking strong inflation trends.
- China’s reopening could bring a turnaround in energy prices and a marked acceleration in core inflation.
- A dovish Fed would bring this turning point forward and add to inflation pressures.
Market Implications
- I disagree with market pricing of rate cuts in 2023 and 2024 and still expect a terminal rate around 8%, higher and later if the Fed turns dovish.
Summary
- The normalization of used car prices and energy price deflation are masking strong inflation trends.
- China’s reopening could bring a turnaround in energy prices and a marked acceleration in core inflation.
- A dovish Fed would bring this turning point forward and add to inflation pressures.
Market Implications
- I disagree with market pricing of rate cuts in 2023 and 2024 and still expect a terminal rate around 8%, higher and later if the Fed turns dovish.
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