Market Commentary

Inflation

housing market

Consumer prices in October jumped .4% to push annual inflation to 1.8%. However, that is still well below the peak of last year at 3%. A large part of the increase was caused by higher gasoline prices. Inflation remains well contained at the consumer level.

Striping out food and energy, two items that tend to have wild swings on a month-to-month basis, inflation rose only .2%; pulling the annual rate of core inflation down from 2.4% to 2.3%.

Inflation has not been a problem for the U.S. economy for several years. Because of the lack of inflation the Federal Reserve does not have to consider inflation in its actions in interest rate policy. To that end, they have lowered rates three times this year. As long as inflation is virtually absent in the economy the Fed has a free hand that should continue into 2020.

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