Inflation rose last month at the fastest pace since 1982. The consumer price index climbed 6.8% in November, coming in hotter than anticipated.
Here's what five experts have to say about inflation, its impact on the Federal Reserve and what it says about the U.S. economy.
Sameer Samana, senior global market strategist at Wells Fargo Investment Institute, said the market reaction Friday gives the central bank the go-ahead to raise rates.
"It was somewhat expected and that's why you are seeing especially the long end of the bond curve start to do well in terms of yields falling and prices rising. You know, really, this is kind of the market giving the Fed a green light to start to begin to raise interest rates and what they're basically telling the Fed is you're on the right path with respect to tapering a little bit faster and at least thinking about rate increases because that long end of the curve is probably the part that's most sensitive to inflation expectations."
Keith Lerner, co-chief investment officer at Truist Advisory Services, said investors may be pricing in more rate hikes than could come to pass.
"Markets are all about expectations, and this came in relative to expectations. And there was some whisper numbers that could be even worse. I think that's why the market so far has reacted okay. As far as the more direct question on the Fed, this definitely allows them to move forward with even a more accelerated taper. I will say, though, right now the market is starting to price in three rate hikes. We think that's too aggressive, especially where you consider with the 10-year below 1.50%. If they want to preserve any type of yield curve, I think they're going to go at a more cautious pace."
Jim Cramer, host of CNBC's "Mad Money," has faith in the Fed's timeline.
"1982 you go back and it was a period where the Fed was just coming out of a terrible rate cycle. Now you know, these comparisons leave me very cold. What really does matter is that that we got rid of the word transitory. I mean, I think [Fed Chair Jay Powell] correctly anticipated this. But if you're on the conference calls, you know that a lot of it is just Covid-related. So I think he's going to get it right again."
Dan Niles, founder and portfolio manager at the Satori Fund, gives his expectations for next year's monetary policy moves.
"This really removed any ability for the Fed to take this slow, and they're going to have to taper more quickly than people anticipate and I've been saying for a while that there's going to be multiple rate hikes in this upcoming year and that's still my belief."
Cecilia Rouse, chair of the Council of Economic Advisers, offers her economic outlook.
"If we consider the economy as a whole, we know that our unemployment rate has roared down, I guess I would say, to 4.2%, that this has been one of the fastest labor market recoveries following a downturn. So we are optimistic that the recovery continues to heal going into 2022. And so with that, I think that inflation will come down over the coming months. Obviously, that will depend on a number of things, but we are working hard to ease supply chain challenges. You know, we're working hard to address any bottlenecks we may see. But importantly, we believe that as we get to the other side of this pandemic, obviously that's at the control of the virus, but as we work hard to get vaccinations into arms, as we vaccinate the rest of the world, that economies around the world will heal and we will see inflation pressures ease."