The Americans have not felt such excruciating inflation since 1981, when "The Jeffersons" and "The Dukes of Hazzard" were dominating the TV ratings. However, it appears that the Federal Reserve is about to overcome it, and without the severe recession and spike in joblessness that many analysts had expected would follow.

Since reaching a peak of 9.1% in June of last year, inflation has been declining rather consistently. Furthermore, according to UBS economists, when the Fed releases its preferred inflation measure for November the following week, it will probably reveal that, during the previous six months, annual inflation actually decreased slightly below the Fed's objective of 2%.

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The Americans have not felt such excruciating inflation since 1981, when "The Jeffersons" and "The Dukes of Hazzard" were dominating the TV ratings. However, it appears that the Federal Reserve is about to overcome it, and without the severe recession and spike in joblessness that many analysts had expected would follow.

For the past six months, the price of products, including furniture, appliances, and secondhand automobiles, has decreased. Goods costs remain mostly stable from a year earlier, thanks to enhanced worldwide supply systems.

One of the main causes of inflation, housing and rental expenses, is expanding more slowly. Although it has slowed, wage growth is still higher than inflation. Less aggressive wage growth typically relieves pressure on lodging facilities, restaurants, and other businesses to raise prices to compensate for labor expenses.

The nonpartisan Congressional Budget Office predicted on Friday that inflation will decrease to 2.1% by the end of the following year.

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Powell Signals Possible Rate Decreases as Inflation Eases

Authorities have stated that there would probably be difficulties in achieving complete control over inflation. Powell emphasized that "no one is declaring victory" and said the central bank will not feel secure that it is returning to the 2% objective until it sees further signs of declining inflation.

However, after more than two years of depressing millions of American households due to inflation, a large number of economists-typically a cautious lot-are suddenly prepared to announce that inflation is almost back under control.

The European Central Bank and the Bank of England likewise maintained their benchmark interest rates this week, indicating that price increases are also abating internationally. Inflation among the 20 nations that use the euro has decreased to 2.4%, despite the fact that it is still 4.6% in the UK.

Powell stated that the 19 members of the Fed's policy-setting committee had talked about the possibility of rate decreases during this week's meeting since inflation has decreased. The Fed is expected to lower its benchmark interest rate three times in 2024 according to the officials' projections.

This position was a significant departure from the Fed's rate-hiking program that it started in March 2022. In an effort to reduce borrowing, spending, and inflation, the central bank started to raise its benchmark rate 11 times, from almost zero to over 5.4%, its highest level in 22 years. As a result, the cost of corporate borrowing, auto loans, mortgages, and other credit increased significantly.

This week, the Fed's rate-cutting plans and Powell's unexpectedly upbeat remarks caused stock market indices to jump. At the Fed's March meeting, Wall Street traders now project an 80% chance that the first rate decrease will take place, with a total of six cuts anticipated in 2024.

Two weeks ago, Powell had said that it was "premature" to determine whether the Fed had raised its main rate high enough to completely combat rising inflation. This week's developments marked a change from that statement. He implied on Wednesday that rate rises by the Fed were most likely coming to an end.

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