by John Carney
Breitbart.com
Irrational Exuberance Over a Soft-ish Inflation Report
The market appeared to take Wednesday’s report on inflation as an all-clear signal, triggering a rally in bonds and stocks as investors began to recover hope in future rate cuts.
The Department of Labor said the consumer price index (CPI) rose 0.4 percent in December compared with November and is up 2.9 percent compared with a year ago. While that was slightly hotter than expected, core CPI came in cooler than expected, rising just 0.2 percent month-over-month. That lowered the year-over-year rate to 3.2 percent from 3.3 percent, slightly better than what was expected.
That was the softest reading for core CPI since July. Analysts had penciled in a 0.3 percent increase, which would have been unchanged since the previous month. Note, however, that the unrounded month-over-month figure of 0.23 percent was just a smidge away from rounding up to the expected figure. Still, the decline represents a significant move in the right direction for core inflation.