Paul Single
Managing Director
Paul.Single@cnr.com
(415) 576-2531

The unemployment rate has fallen to near-record levels, yet inflation has not moved up. In fact, inflation has stayed below the Fed's target rate of 2 percent for the past few years.

This has forced the Fed to rethink the relationship between employment and inflation. Historically, the inflation rate has trended downward since the early 1980's. There are many reasons for this, most notably global trade, the rise of the internet and consumers having lower expectations of future upward pressure on inflation.

As a result, the Fed has been lowering its view of the overnight lending rate. Ever since the Fed started to forecast that rate back in 2012, it has been reduced from 4.25 percent to 2.75 percent.

What does all this tell us? It is likely that the Fed is getting closer to ending its fiscal tightening program earlier than previously expected.

Index Definitions

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

Important Disclosures

The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. This presentation is not an offer to buy or sell, or a solicitation of any offer to buy or sell, any of the securities mentioned herein.

Certain statements contained herein may constitute projections, forecasts, and other forward-looking statements, which do not reflect actual results and are based primarily upon a hypothetical set of assumptions applied to certain historical financial information. Certain information has been provided by third-party sources, and although believed to be reliable, it has not been independently verified, and its accuracy or completeness cannot be guaranteed.

Any opinions, projections, forecasts, and forward-looking statements presented herein are valid as of the date of this document and are subject to change.

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Non-deposit Investment Products: ▪ ARE NOT FDIC INSURED ▪ ARE NOT BANK GUARANTEED ▪  MAY LOSE VALUE