1. FOMC INTEREST RATE DECISION
• On December 14th, the Federal Reserve’s policy-setting committee raised their target Federal Funds
Rate (FFR) range by 50 basis points to 4.25%-4.50%, slowing their speed of rate increases after four
consecutive 75 basis point hikes — an apparent response to evidence of slowing inflation.
• In their statement accompanying the FOMC meeting, members remained hawkish in their commitment
to slowing the economy’s price pressures, largely refraining from any shift in tone compared to their last
meeting, despite a deceleration in rate increases. Officials expect to continue increasing rates well into
next year.
• Benchmark interest rates now sit at their highest level since 2007, with officials, on average, projecting a
5.1% terminal rate — the rate at which the committee stops increases — according to the FOMC’s latest
dot plot.
2. CPI INFLATION
• The Consumer Price Index (CPI) rose 7.1% year-over-year and just 0.1% month-over-month, according
to the latest numbers from the Bureau of Labor Statistics — below most industry estimates. The annual
inflation rate has now fallen for five consecutive months.
• Core CPI, which removes food and energy prices from the calculation and is more closely tied to monetary
policy decisions, rose 6.0% over the past 12 months and 0.2% between October and November.
• Energy costs rose 13.1% year-over-year through November but contracted by -1.6% month-over-month.
Food costs increased by 10.6% year-over-year and 0.5% month-over-month, the slowest monthly increase
since December 2021.
3. RENTER VS. HOMEOWNER INFLATION
• According to Chandan Economics’ recalibrations of CPI data, the adjusted inflation rate for renters was
7.1% year-over-year in November, squarely in line with the increase in headline inflation while falling -0.7%
from one month earlier.
• Meanwhile, fixed-rate mortgage homeowners experienced a 4.8% year-over-year inflation rate through
November and falling -0.8% month-over-month.
• The spread between renter and homeowner personal inflation rates reached 2.3% in November, a new
record according to Chandan Economics’ calculations. In the six years between 2014 and 2020, the
rate of renter inflation averaged 1.1 percentage points higher than homeowner inflation. Notably, the
spread remained consistent over this period — never departing more than ten basis points from the 1.1
percentage point average…
