- The Consumer Price Index rose at an annual pace of 7.1% in November
- The Federal Reserve hiked the federal-funds rate by 0.50% to a range of 4.25%-4.5%
- 32% of small business owners cite inflation as the most important business problem
Top Three Market Headlines
Inflation Decelerates but Remains Elevated: The U.S. Department of Labor reported last week that the Consumer Price Index rose 0.1% in November over the prior month, down from its prior monthly increase of 0.4% in October. On an annual (year-over-year) basis, the index rose 7.1%, a deceleration from last month's 7.7% pace and the lowest reading since December of 2021. Rising prices for shelter and food continued to pressure the Index in November, while declining prices for energy and used cars dampened the overall rate. The core CPI, which excludes energy and food prices, rose 6.0% in November from last year, down from a recent cycle high of 6.6% in September.
Fed Slows the Pace of Rate Hikes: The Federal Reserve last week raised the target for its interest rate benchmark, the federal-funds rate, by another one-half percentage point to a range of 4.25%-4.50%. The central bank has now boosted the target rate seven times this year, though the latest move marked a downshift in the pace of the Fed's rate-hiking campaign following four consecutive 0.75 percentage point increases over the last six months. However, the central bank reaffirmed that ongoing increases in the policy rate would be appropriate as it seeks to dampen inflation.
Small Business Optimism Remains Restrained: The National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index rose marginally in November from 91.3 to 91.9. Nonetheless, this was the eleventh straight monthly reading below the index's 49-year average of 98.0. A principal concern for small business owners remains inflation, which was cited as the top business problem by 32% of survey respondents. In addition, difficulty finding workers persists, with 44% of business owners reporting they were unable to fill open positions.
Please note: There will be no Weekly Financial Market Update published next Monday, December 26. We would like to wish everyone a happy holiday season!