KBRA believes the October Consumer Price Index (CPI) reading released on November 10 is exactly the kind of print that investors and the Federal Reserve want to see, as policymakers confront the highest rate of inflation in four decades. While one datapoint does not constitute a trend, the latest CPI reading suggests that both parts of the inflation equation—overheated demand and constrained supply chains—are easing. While we still believe a mild recession is likely in 2023, we note that further evidence along these lines reduces the central bank’s impulse to hike rates aggressively, which would intensify a contraction.

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KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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