Summary
United States: Consumers Maintain Spending Power Amid Slowing Price Growth
- Data released this week revealed that gradually easing price pressures are promoting consumer resilience, while high financing costs continue to bite producers. Although core CPI remained elevated in November at a 4.0% annual rate, a string of slower monthly prints suggests that disinflation has more room to run.
- Next week: Existing Home Sales (Wed.), LEI (Thu.), Personal Income & Spending (Fri.)
International: G10 Central Bank Focus Shifting from Rate Hikes to Rate Cuts
- G10 central banks are in the process of transitioning from rate hikes to rate cuts, with the European Central Bank, Bank of England and the Swiss National Bank holding rates steady this week. In Japan, a relatively sturdy Q4 Tankan survey pointed to a resumption in economic growth. Last, China’s latest economic data suggest its economy will end the year on a stable note rather than a strong one.
- Next week: Bank of Japan Policy Rate (Tue.), Colombia Overnight Lending Rate (Tue.), U.K. Consumer Price Index (Wed.)
Interest Rate Watch: A Win for the Doves
- As widely expected, the FOMC left the fed funds target range unchanged at 5.25%-5.50% in a unanimous vote. The decision marked the third consecutive meeting that the Committee held policy steady. While the rate decision came as no surprise, this week’s meeting shaped up to be one of the clearest messages yet that the torrid hiking cycle that began in March 2022 has come to an end.
Topic of the Week: The Fiscal Tailwinds Are Still Blowing
- Government hiring and output have accelerated this year even as indicators of private sector economic activity have shown some signs of slowing. In a report published earlier this week, we examined the recent pickup in public sector payroll and production growth and analyzed the outlook for this sector of the economy in 2024 and beyond.
