Based on the most recent CPI release, the Fed’s interest rate hike initiative, which began in March 2022, appears to have come to a halt. Powell’s comments at the November 1st FOMC meeting, while highlighting that 2% is still the target inflation rate, also added that the Fed will consider the “cumulative tightening” that has occurred thus far.   Since that time, retail sales have demonstrated some degree of weakness

Notably, the CPI reading for October was flat compared to the month prior and 3.2% year over year.  This was lower than consensus, demonstrating inflation is leveling off and inflation fears are being squeezed out of the market.  The recent October retail sales report of -.1% also encouraged market views that Fed hikes are off the table, and the next move by the Fed will be rate cuts in early to mid-2024.

The below link is a detailed summary of the CPI release:

https://www.bls.gov/news.release/pdf/cpi.pdf

For a direct read of the November 1st FOMC statement, which set the market up for an acute focus on the CPI release, see the attached link:

https://www.federalreserve.gov/newsevents/pressreleases/monetary20231101a.htm

Thus far, the Fed has hiked rates 525bps over the past 18 months and has decreased securities holdings by over $1 trillion.

If the Fed is now data-driven as to whether to hike rates further, today’s CPI release and the recent weaker than expected Retail Sales  numbers are a vote towards steady rates in the near term and rate cuts in 2024.

The next  CPI release is December 12th and the first CPI of the year is January 11th.