December’s Consumer Price Index (CPI) data revealed prices to have risen in line with economist expectations, inching up by 0.4% for the month and 2.9% over the past year. Core CPI, which excludes volatile food and energy prices, showed encouraging signs of cooling by rising below projections — 0.2% month-over-month and 3.2% year-over-year. New Century Advisors’ chief economist Claudia Sahm joins Morning Brief to share her insights on the latest inflation figures. Sahm notes there is continued “slow progress” on inflation. “That’s the big piece of this. We’ve been in a very wait-and-see on the inflation front… so it is a bit of a breather to get some not-bad news this morning. But it’s really not a game changer,” she tells Yahoo Finance. Sahm — a former Federal Reserve Board economist and the creator of the central bank’s Sahm Rule recession indicator — draws parallels to early 2024’s economic conditions. She highlights how the Fed had “set a really high bar” for ensuring inflation was not only decreasing but would stabilize at their target rate of 2%. “That means you have to wait. It’s not about one month of good news. It’s not about two months of good news,” she explains. “Just because we’re in a waiting game doesn’t mean we are in a stopping game,” she states. While the data suggests an easing cycle, Sahm expects it to be “very slow,” noting it’s “too early” to predict how exactly the Fed will cut interest rates in 2025.
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