The financial markets are currently in the process of factoring in or getting in front of the upcoming release of the core PCE report. On Friday the Bureau of Economic Analysis will release the most current information on inflation for December. Current estimates are anticipating a continued decline in core inflation from 4.7% in November to 4.4% last month.
The Federal Reserve had maintained rates between 0 and ¼% since 2018. That ended in March 2022 when the Federal Reserve raise rates by ¼%. What followed a series of extremely aggressive rate hikes of ½ a percent in May. Followed by four consecutive ¾% hikes in June, July, September, and November. Finally, in December they only raise rates by half a percent. Collectively the seven consecutive rate hikes took interest rates from near zero to between 4 ¼ and 4 ½%.
According to Investing.com the US core PCE index was at 4.7% in November and is expected to decline to 4.4% in December. This clearly illustrates that the Federal Reserve’s aggressive monetary policy has effectively decreased inflation during 2022. However, the Federal Reserve’s most recent economic which was released at the December FOMC meeting clearly stated that they do not intend to reduce interest rates during the entire calendar year of 2023.