December's inflation numbers landed exactly where they were in November: 2.7% year-over-year. Markets shrugged and basically said "good enough," but it's still too hot for the Federal Reserve to justify slashing rates anytime soon. Now, as political voices grow louder demanding cheaper borrowing costs, prominent strategist Charlie Bilello is drawing a line in the sand, calling outside pressure on the central bank what it really is: price fixing.
The Inflation Picture: Not Bad, Not Great
The Consumer Price Index showed prices holding steady at that 2.7% annual increase. There was a silver lining buried in the data—core services inflation excluding housing, which economists lovingly call "super core," cooled to 2.76% from earlier highs. But the monthly pace still runs warmer than the Fed would like.
Jeffrey Roach, Chief Economist for LPL Financial, expects the central bank to sit tight this month. He sees conditions potentially justifying a rate cut by April, especially as economic risks start tilting toward a weakening jobs market. Eric Teal, Chief Investment Officer at Comerica Wealth Management, thinks inflation will bounce around between 2.2% and 2.7% for the foreseeable future.
Why Bilello Is Defending the Fed's Pause
The data essentially locks in what markets already expected: the Fed will leave interest rates alone at its January 28 meeting. Bilello, Chief Market Strategist at Creative Planning, says that's the "right decision," even if it makes people angry.
Here's where it gets interesting. As political pressure builds for the Fed to lower rates and juice the economy, Bilello argues that interest rates should be determined by market forces—supply and demand—not by whoever occupies the White House.