He The latest sign of inflation decline is in the books when the year comes to an end.
Price increases cooled last month, adding credence to the belief that the Federal Reserve is very likely to start cutting rates as early as March, said Jamie Cox, managing partner at Harris Financial Group.
"Disinflation is now in the data, and that is tremendously positive for the economy and the market," he said in a note on Friday, following the release of new PCE data.
But other experts expressed caution.
Although inflation readings continue to trend downward, the figures remain well above the 2% target set by the Federal Reserve. Indeed, even as some market observers have recommended that the Federal Reserve adjust its inflation target to reflect the nuances of the current economy, Federal Reserve Chair Jerome Powell has explicitly resisted those calls, repeatedly emphasizing that the central bank will eventually reach 2% inflation.
Alex McGrath, chief investment officer at NorthEnd Private Wealth, said the 3.2% figure is less supportive of the imminent rate cuts the market expects. "This is especially highlighted when we consider durable goods orders that far exceeded expectations," he said Friday. If the economy never slows down enough to completely eradicate inflation and the Federal Reserve starts cutting rates, that could trigger a new wave of inflation, he said.
Still, as Quincy Krosby, chief global strategist at LPL Financial, said in a note on Friday, โ3.2% represents a victory for a Federal Reserve that remains very focused on restoring price stability without damaging a still labor market.โ healthy, in essence balancing its two mandates."
