CPI inflation has peaked, but the timing of reaching the 2% target is not visible.

The US CPI (August) was stronger than expected, but there was no urgency to raise interest rates at the FOMC meeting on September 20th. The composite rate was 0.6%/3.7% and the core rate was 0.3%/4.3%. The super core rate (excluding energy and rent) was 0.4%/4.0%. Although the inflation rate has risen rapidly from 3.2% to 3.7%, it has clearly declined from last year's peak of 9.1%.

The goal of reaching 2% has not been achieved, and the growth of the economy is only 0.2% compared to the previous year, reflecting the economic downturn. Rent, which accounts for 35% of the allocation, is high at 7.3% compared to the previous year, but it has gradually decreased compared to the previous month. The wages that determine the price of services, according to the Atlanta Fed's wage growth tracker, are 5.3%, which is below the pre-COVID 3-4%, and clearly lower than the peak of 6.7% last year.

In short, inflation has peaked and there are signs of decline, but the timing of reaching the target is not yet clear. It is necessary to make a policy decision whether to achieve the target with a higher interest rate or with a long-term interest rate. Considering weak economies in other countries from a global perspective, the latter option seems more likely.