The recent easing of inflation data is welcome news for policymakers, but it is “not yet evidence that inflation has cooled to levels consistent with a persistent inflation target,” warned Unicredit Bank economist Edoardo Campanella in a note. Gave.
The Fed’s long-term inflation target is 2 percent.
“The Fed will likely slow the pace of rate hikes to 25 basis points early next year,” Campanella said.
“However, the labor market is still very tight … and with broader financial conditions easing, the Fed will probably say their work is not done,” he said.
Neil Saunders, managing director of GlobalData, said the Fed is taking an “aggressive approach on inflation” and further tightening is needed based on the continued strength of underlying demand in the economy.
“While this action may have the desired effect, it will cool the economy at a time when it is already under pressure in 2023,” Saunders said.