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The US Bureau of Labor Statistics reported that December’s CPI remained steady at 2.9% year over year, while core CPI — excluding food and energy — came in at 3.2% annually, which was less than expected.
Aditya Bhave, senior US economist at Bank of America (BAC) Securities, joins Market Domination to discuss the impact of this data, noting that while it’s positive, the Federal Reserve "is going to be on hold moving forward."
"What this report does, and it is undoubtedly good news ... it trims the tail risks of a hike," Bhave explains. "We have not been in the re-acceleration camp; we've been in the sticky inflation camp."
Bhave emphasizes the importance of quarter one data and admits he feels "comfortable" with inflation being stuck around 2.5%, noting that it's where the Fed says "we’ll be at the end of this year as well."
Additionally, Bhave notes that he doesn't see interest rate cuts unless inflation decreases faster, particularly in rents and owners' equivalent rent (OER).
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This post was written by Josh Lynch