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MNI US Inflation Insight, Dec'22: Paving The Way For Another Downshift In Feb?


  • CPI inflation was again weaker than expected in November as core slowed further from 0.27% to 0.20% M/M with a likelihood that core PCE inflation was consistent with the 2% inflation target.
  • There were some mixed takeaways from individual categories, but the main one is that all three major components of core (goods, shelter, and non-shelter services) moderated.
  • In particular, after emphasis from Chair Powell, core services ex housing pointed to a further sequential moderation across different measures, although no official series adds to a risk of misinterpretation.
  • The FOMC should still hike 50bp today but watch for a more dovish tilt plus the distribution of 2023 dots. Markets eagerly watch for a steer towards a further downshift in Feb but labor data could hold the key.



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