Inflation Just Did Something It Hasn't Done Since 2009, and It Could Trigger a Big Move in Interest Rates (and the Stock Market)
Inflation is measured using the Consumer Price Index (CPI), an ongoing survey that tracks the change in price of a large basket of goods and services by comparing it to a previous point in time.
The U.S. Federal Reserve has been tasked with trying to keep the CPI growing by an average of 2% each year. One way it does this is by adjusting the federal funds rate (also called the prime lending rate), which affects overall interest rates. Large swings above or below that target can have a huge influence on the price of assets like stocks, bonds, and housing.
2023 is now in the books and the CPI declined significantly. A comparable drop hasn't been seen since 2009 and 1982, and those occasions marked two of the longest winning streaks for the S 500 (SNPINDEX: ^GSPC) in stock market history. Here's why it could happen again.
Source Fool.com
