The latest release of the Federal Reserve’s “Beige Book” includes an inflation report. The report shows that the CPI increased by 2.6% in December, more than expected and above the target range of 2% to 2.5%. The Fed has been raising interest rates in order to tamp down on inflation, but it appears that they may have hit a ceiling in terms of how far they can go without causing a recession. When the Fed raises interest rates, it also raises the prices of all other things that people buy, including stocks. As a result, Stock market inflation is often measured by the rise in stock prices. The CPI is a measure of what consumers are actually paying for goods and services.
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