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FINANCIAL TERMS

Cooling Inflation

Description

Cooling inflation means inflation is slowing down. In simple terms, prices may still be rising, but they are rising more slowly than before. Cooling inflation is important because it can reduce pressure on households, businesses, and central banks. If inflation cools steadily, investors may expect interest rates to stop rising or even fall later. For example, if inflation falls from 6% to 4% to 3%, people may say inflation is cooling.