November 14, 2023, 10:25 am EST
Inflation cooled down significantly from the peak 9.1% to 3.2% (June – October 2023) according to the Consumer Price Index report released today.
The primary reason for this cooling effect is due to the lower gasoline prices that went down to $76 per barrel (WTIC) from the peak of $94 during the last 1.5 months.
Indeed, it occurred during the major wars including the recent one in the Middle East which the odds are not what most people expected.
The stock market jumped up with a gap for 500 points in the Dow Jones index. Major indexes are up about 1.5% to 2.3% as of now.
The drop of the inflation would support the end or pause of rate hikes for the Federal reserve. Moreover, the Fed could reduce the rates in order to further stir up the markets. Without the inflation threat, the Fed can work fully with the stock markets to send the indexes to record highs like it did in the past decades since 2009.
However, it is important to note that the record high debt level is still there. Furthermore, inflation could come back again to hurt the economy. Or, geopolitical unease could produce bigger conflict globally.
It would be good to prepare for any surprising movement even if there are bullish news from the inflation report.