Mid-September, the Labor Department announced that its Consumer Price Index (CPI) dropped 0.1 percent, marking its first dip since January. In the past 12 months, the CPI has grown by 0.2 percent.
This data points to an overall trend of disinflation in the United States as gasoline prices have declined and the dollar has gained strength. Overall the trends run in contrast with the general health of the economy and also serve to highlight the Federal Reserve's recent decision to consider a rise in interest rates.
The Reserve was set to discuss this matter on September 16, but in the face this new data, lower-than-expected domestic job and wage growth and uncontrollable upsets in foreign markets, the September Open Market Committee decided to postpone a hike.
This decision is particularly good news for the real estate market, and particularly real estate investment trusts, which gained over 1 percent in the day following the decision.
The Fed will meet against on October 27 and 28, when it will once again bring the subject of increasing interest rates to the table. Whether or not they raise it then or at some other point in the near future, it's likely that this initial increase will be small and have little impact on borrowers. What it will serve as, though, is a signal towards the Fed's future policies.
Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania says that "You can make a strong case either way for the Fed to begin raising interest rates or waiting," adding that "The prudent risk management approach would argue for them to hold off, but if the Fed was really data dependent there is a very a strong case to raise rates."
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