Celebrate Victory Over Inflation, Even if the Fed Doesn’t

This morning’s beats in headline and core CPI are the first of what will be two great pieces of inflation news before the FOMC meets in December. Without OER, both headline and core are already below the Fed’s targets. There will be no more rate hikes. Outright deflation will start to manifest in Q1-2024 in indices excluding OER, and in Q2-2024 in all of them. The Fed’s aggressive hiking has little to do with the monetary roots of the rapid relief from this inflation cycle. Its very rapidity has supported growth despite the Fed. Now with inflation visibly conquered and deflation soon to emerge, the first rate cut should come in March. We continue to call for no recession.