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Inflation Is Slowing, but the Fed Is Not Satisfied

The Fed is expected to dial back interest-rate hikes to a quarter-point move next week, but inflation remains well above their 2% goal.

By Augusta Saraiva | January 25, 2023 at 02:43 PM
Shoppers carry bags inside the Westfield San Francisco Centre shopping mall in San Francisco, California, on December 22, 2021. Shoppers carry bags inside the Westfield San Francisco Centre shopping mall in San Francisco, California, on December 22, 2021.

The Federal Reserve’s preferred inflation gauges probably cooled in December to the slowest pace in more than a year, reinforcing a step down in the pace of interest-rate hikes but likely not enough for officials to discuss a pause.

Economists project a 5 percent annual increase in the personal consumption expenditures (PCE) price index due Friday, and a 4.4 percent rise in the core metric, which excludes food and energy. Both numbers would represent the smallest advances since late 2021, and estimates for monthly changes also point to moderation compared with earlier last year.

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