Will Negative Inflation Prompt a Shift in Fed Policy?

The Breakdown

Blockworks

Investing, Business

4.8 • 786 Ratings

🗓️ 13 January 2023

⏱️ 15 minutes

🔗️ Recording | iTunes | RSS

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Summary

On today’s episode, NLW digs into December’s just-released CPI numbers. For the sixth month in a row, year-over-year inflation declined. For the first time in more than two years, month-over-month inflation declined. For many, this confirms a Federal Reserve shift back to raising rates by 25 basis points at the FOMC’s next meeting at the end of this month. Enjoying this content? SUBSCRIBE to the Podcast Apple: https://podcasts.apple.com/podcast/id1438693620?at=1000lSDb Spotify: https://open.spotify.com/show/538vuul1PuorUDwgkC8JWF?si=ddSvD-HST2e_E7wgxcjtfQ Google: https://podcasts.google.com/feed/aHR0cHM6Ly9ubHdjcnlwdG8ubGlic3luLmNvbS9yc3M= Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW - Join the most important conversation in crypto and Web3 at Consensus 2023, happening April 26–28 in Austin, Texas. Come and immerse yourself in all that Web3, crypto, blockchain and the metaverse have to offer. Use code BREAKDOWN to get 15% off your pass. Visit consensus.coindesk.com. - “The Breakdown” is written, produced by and features Nathaniel Whittemore aka NLW, with editing by Rob Mitchell and research by Scott Hill. Jared Schwartz is our executive producer and our theme music is “Countdown” by Neon Beach. Music behind our sponsor today is “Swoon” by Falls. Image credit: Nuthawut Somsuk/Getty Images, modified by CoinDesk. Join the discussion at discord.gg/VrKRrfKCz8.

Transcript

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0:00.0	Welcome back to The Breakdown with me, NLW.
0:09.3	It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world.
0:15.3	The breakdown is produced and distributed by CoinDesk.
0:20.4	What's going on, guys?
0:21.5	It is Thursday, January 12th, and today we are talking inflation.
0:26.6	For the sixth month in a row, headline inflation has gone down.
0:31.2	Before we get into that, however, if you are enjoying the breakdown, please go subscribe
0:34.3	to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.L.Y slash breakdown pod.
0:44.0	All right, friends, we are in the macro side of the house today because today is inflation day.
0:51.2	The first Thursday in a new month is when we get the official inflation data
0:54.9	from the month previously, and this one has definitely felt a little more significant than
0:59.9	some in the past. We've had relatively good inflation prints for the last couple of months,
1:04.8	and traders seem to think that coming into this one, the stakes were a little bit higher,
1:08.8	like this one might have more of an impact in
1:11.1	showing the Fed that there actually was a trend than those previous reports.
1:15.2	The basic narrative before this print was that everyone was expecting CPI to come in cold,
1:21.2	with a fair chance that it would show month-over-month deflation. Because of that, it had been a
1:26.1	partial driver of the current rally.
1:28.6	Now, the concern, of course, would be that markets were getting ahead of themselves and that
1:32.0	the print would end up coming in hot. Estimates overall were for a 6.5 headline inflation
1:37.2	and 5.7% core inflation. For some context, remember in November, had 7.1% headline inflation
1:43.9	and 6% core.
	...

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