U.S. Review

War Not Yet Won on Inflation - The December Consumer Price Index data was the most significant macroeconomic development of the week and showed modest deflation to finish 2022. We now expect the Fed to hike the federal funds rate by just 25 bps at its next policy meeting on February 1, but a slower pace of tightening does not necessarily mean less.

Global Review

What's Happening in the Rest of the World? - Brazil's December CPI data showed inflation receding less than expected. Over the past several months, inflation has sharply fallen from its peak, but with Lula now in office, fiscal policy may begin to move in a more inflationary direction. Down under, inflation pressures in Australia remain persistent. After receding from its 7.3% peak in October, headline CPI re-accelerated to 7.3% year-over-year in November. Housing, food and transport prices saw the most significant price rises. Last but not least, U.K. November GDP registered a surprise 0.1% month-over-month gain, lowering the likelihood that a U.K. recession occurred at the end of last year.

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