Transition From Higher in a Hurry to Data Dependency
On Wednesday, the Federal Reserve approved an interest rate increase of 0.5%, a smaller increase than the previous increase of 0.75%. Thus, the reference rate stood in the target range of 4.25%-4.50%, its highest level since 2007. The slowdown in the rate of increases represents recognition by the fed that inflation is subsiding in certain sectors. But as Powell noted there is still significant work to do in order to bring down the core services portion of the CPI print.
So far November has had the smallest month over month increase of 0.1% this smaller than expected increase led to a surprise reading of 7.1% year over year, given the market's expectation of 7.3%.
November saw a record 30% year-on-year increase in the budget deficit, mainly explained by lower revenues and expansive spending on education and health, in addition to the considerable increase in interest on the public debt.