November 14, 2022 — Inflation Eases

NOVEMBER 14, 2022 – INFLATION EASES TO 7.7 PERCENT IN OCTOBER

US inflation eased slightly in October up 7.7 percent year-over-year and up 0.4 percent from last month. The data is slightly lower than economists expected.  Core inflation is up 6.3 percent year-over-year and 0.3 percent over October. Even though the pace is easing, it remains well above the Fed’s two percent target. 

Unemployment and layoffs remained low in October and wages grew though they didn’t keep up with inflation. Consumer spending grew more slowly in the third quarter than in the second. The economy is showing signs of slowing down, but not significantly enough to cause a policy change from the Fed.

As inflation remains entrenched, the best that can be expected from the Fed is a lesser increase at the December meeting. Expectations are for rates to go up 0.5 percent, less than the numerous 0.75 percent increases that have happened this year.  Economists at the banks are predicting terminal rates in the range of 5.25 to 5.50 percent by time the Fed is done. Rates now stand in the range of 3.75 to 4 percent.