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Glossary · Economy

Inflation

The rate at which prices rise across the economy, usually measured over a year.

Why it matters

Inflation erodes what profits and savings can buy, and it decides what the Fed does with interest rates. Rates in turn decide what investors will pay for stocks.

How to read it

The Fed aims for about 2% a year. Inflation well above that means higher rates for longer; falling inflation gives the Fed room to cut.

Related

FOMC (the Fed’s rate meeting)The Federal Open Market Committee: the Fed group that sets the target for short-term interest rates, eight times a year.Yield curveThe line connecting Treasury yields from short (3 months) to long (30 years) maturities.

In the Cluenex app, this explanation opens next to every inflation figure, with the live reading for the stock you are looking at. Open it in Cluenex