Euro Region Ends 2023 with Inflation Increase; Wall Street Sees Robust Gains

ECB officials attribute inflation rise to higher energy costs and fiscal aid phase-out, while investors anticipate Federal Reserve rate cuts in early 2024.

• The euro region ended 2023 with an upward bump in inflation, with consumer prices rising 3% in December from a year earlier.
• European Central Bank (ECB) officials believe the inflation increase is due to higher energy costs in 2022 and the phasing out of fiscal aid to households in Germany and elsewhere.
• ECB Vice President Luis de Guindos stated that any easing won't be immediate and will only occur once inflation is clearly converging in a stable manner to their target of 2%.
• Wall Street ended 2023 with surprisingly robust gains, with the S&P 500 index up 24.6% for the year, the Dow Jones Industrial Average up more than 13%, and the Nasdaq up 44%.
• Investors now expect the Federal Reserve to begin cutting rates as early as March 2024.

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