Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro . It’s been a pretty good week for Joe Biden. The president’s party may yet lose control of the House and Senate next year, but White House officials were thrilled that Democrats didn’t suffer bigger losses on Tuesday. Instead of a bloodbath, it was the best midterm election for a party in power in nearly a century. And it got even better Thursday morning, when the Labor Department said inflation cooled significantly last month. The consumer price index, which measures what Americans pay for everything from laundry detergent to lawnmowers, rose 7.7 percent in October from a year earlier — down from an 8.2 percent increase the previous month, and less than the 7.9 percent that economists expected. Core prices, excluding food and energy, similarly eased. Stocks jumped on the news and Treasury yields fell amid hopes that the improving inflation picture will mean a quicker end to Fed rate increases. For now, the report keeps the Fed on track for a half-percentage-point rate hike next month. “Usual caveats apply — it's just one datapoint — but today's inflation data gives me more comfort that the Fed rate hike campaign will come to a close in January, with a peak policy rate of 4.75%,” said PGIM Fixed Income chief global economist Daleep Singh, a former Biden White House official, in a note Thursday. The highlights: The report showed that services inflation, excluding shelter costs, is decelerating, after a “disturbingly upward climb” over the past couple of months, Singh said. But the deceleration is partly due to a change in the methodology for estimating health insurance prices, which makes the big decline for the month a bit misleading, said Ryan Sweet, chief U.S. economist for Oxford Economics. Still, there was good news beyond that — growth in food prices moderated, and some other supply-constrained sectors fell, including used car and truck prices. Food and energy prices remain a wildcard risk, Singh said. “Much depends here on the outcome of the game of chicken between the G7 and Russia on the looming oil price cap … as well as the flow of grain from Odessa, both of which are factors entirely outside the Fed’s control,” he said. There’s more data to come, including a report on the Fed’s preferred inflation gauge at the end of the month, a jobs report in early December and another report on consumer prices before the Fed’s Dec. 13-14 meeting. There’s a long way to go before inflation is back to normal levels, and there may be bumps along the way, Biden acknowledged in a statement Thursday, adding that officials will “keep at it” — echoing the title of former Fed Chair Paul Volcker’s 2018 autobiography. But he also took a moment to boast about the icing on an already sweet week: “Today’s report shows that we are making progress on bringing inflation down, without giving up all of the progress we have made on economic growth and job creation.” IT’S FRIDAY — You made it. Take a breath. Or a nap. But send us your tips, story ideas or feedback before you log off for the weekend: kdavidson@politico.com and ssutton@politico.com .
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