US inflation rate fell noticeably before the turn of the year

Jerome Powell

The Chairman of the US Federal Reserve speaks at a panel discussion.

(Photo: dpa)

Washington the inflation in the United States has declined significantly before the turn of the year. The inflation rate for goods and services fell to 6.5 percent in December from 7.1 percent in November, the Labor Department said in Washington on Thursday.

Experts surveyed by the Reuters news agency had expected 6.5 percent. It is already the sixth decline in a row and fuels hopes that the wave of inflation is abating.
Nevertheless, the rate of inflation is still well above the central bank’s target fed of 2.0 percent. This increased the base rate in December by half a percentage point – to the new range of 4.25 to 4.50 percent.

The monetary authorities meanwhile see considerable progress in curbing inflation and want to steer a less aggressive course.

Bastian Hepperle of Bank Hauck Aufhäuser Lampe told Reuters: “The decline in the inflation rate was not a flash in the pan and will progress. In June, the two before the comma could appear again for the first time in more than two years. The direction is right, but inflationary pressures are still too high to fed to calm down.”

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Hepperle warns: “The Fed will continue to tighten interest rates, but must gradually be careful not to overdo it.”

Thomas Gitzel, chief economist VP Bankclassifies the development optimistically: “The issue of ‘inflation’ is becoming less explosive, and the Fed can use it to shift down a gear.”

The Fed is expected to raise interest rates further before pausing to assess how rate hikes are affecting the economy, according to Bloomberg.

More: FX Outlook 2023: Dollar Rally Losing Momentum

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