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As Federal Reserve Chair Jerome Powell warned last week: It would be “premature” to say the central bank has raised rates high enough — or kept them elevated for long enough — to assure the rate of inflation will fall to its annual target of 2 percent.

But almost two years after the Fed began raising rates to cool surging prices, a growing number of consumers and market participants — along with top economists — are a lot less worried about rebounding inflation. Few expect much drama when the Labor Department reports November’s consumer price index at 8:30 this morning, as the Fed’s open market committee kicks off its two-day meeting on monetary policy.

“It’s constructive and encouraging that the sturm und drang around these inflation reports is dissipating,” Joe Brusuelas, the principal and chief economist for the consulting firm RSM US, told MM on Monday. “This is what you want from an economic and policy perspective.”

Economists forecast the annual rate of inflation dipped to 3 percent, down from 3.2 percent in October. “Core” inflation, which excludes food and energy prices, is expected to remain flat at 4 percent.

Any outcome that’s close to those projections will keep the Fed on a path to holding rates steady later this week, Dave Sekera, the chief U.S. market strategist at Morningstar, said in a research note on Monday afternoon.

“I’m not all that concerned about CPI; I think it would have to come in a lot hotter than consensus for it to change the outlook for inflation,” Sekera wrote.

Why does this matter?: This isn’t the first time Wall Street analysts and economists have been sanguine about the Fed’s battle with inflation. What’s unique now is the growing evidence that consumers have started to believe the hype.

Wage growth has been outpacing inflation for months. President Joe Biden’s reelection chances could depend on it, and a mellow CPI print for November might help his case that the economy is on safer footing than public polling of his performance suggests.

The Federal Reserve Bank of New York’s Center for Microeconomic Data’s November survey reported Monday that respondents now expect prices to climb by 3.4 percent next year — the lowest reading since April 2021. The University of Michigan’s consumer sentiment survey on Friday also found that inflation expectations have eased.

The improvement has corresponded with a decline in gas prices — from $3.82 in early August to $3.15 as of Monday, according to AAA — that often improves consumer outlooks. Gas prices are volatile, however, and the recent improvements in consumer sentiment could reverse if conflicts or supply cuts cause prices at the pump to surge.

But for now, “we’re now moving toward tolerable levels of inflation,” Brusuelas said.

IT’S TUESDAY — This is probably my last Morning Money top until May so I can take advantage of POLITICO’s (generous) paternity leave. But don’t worry, you’re in good hands. And if you find yourself in New York City, I’m sure I can find time for coffee or a pint. As always, send tips and suggestions to me at [email protected] and to Zach at [email protected].

CFTC Chair Rostin Behnam will be on CNBC’s “Squawk Box” at approximately 7:10 a.m. … The Consumer Price Index for November will be released at 8:30 a.m. … Treasury Secretary Janet Yellen will speak at the WSJ’s CEO Summit at 9:30 a.m. … The Atlantic Council hosts a panel on de-dollarization at 9:30 a.m. … House Financial Services has a subcommittee hearing on energy sanctions at 10 a.m. … Senate Appropriations has a subcommittee hearing on disaster recovery funds at 10 a.m. … House Financial Services has a subcommittee on self-regulatory organizations for auditing and accounting at 2 p.m. …

Expect a lot of focus on housing in today’s CPI coverage — The NYT’s Jason DeParle reports on the challenges facing families whose incomes fail to meet the government’s definition of “poor,” but are nonetheless unhoused due to rising rent cots. Meanwhile, the WSJ’s Gina Heeb has a story about how higher home prices and elevated interest rates have made homeownership impossible for many prospective buyers.

One more CPI thought — Even if the November CPI shows an increase in core inflation, some of that would likely be due to a temporary increase in used car prices, said Stephen Juneau, a U.S. economist at Bank of America Global Research. Those would fade after “a couple of months at most” as prices increasingly reflect the return of striking auto workers, he added.

— To wit: The stock market closed at a 2023 high as “market watchers increasingly believe the central bank is done with its interest rate hike cycle and could potentially cut rates in the first half of next year,” Reuters’s Chuck Mikolajczak reports.

— Still, as The WSJ’s Charley Grant writes, there’s fear that the market surge at the end of the Fed’s tightening cycle could just be “sugar high.”

— Meanwhile, the small business community is less optimistic, according to fourth quarter MetLife and U.S. Chamber of Commerce’s Small Business Index results shared with MM. Sentiment fell during the final months of the year and around half of those surveyed said that inflation remains among their biggest challenges. Still, around two-thirds of the business owners surveyed said the overall health of their business is very or somewhat good, and a similar percentage said they were somewhat or very comfortable with their current cash flow.

Trouble at the FDIC — Our Victoria Guida reports that the internal committee overseeing an investigation into FDIC workplace conduct has hired law firm Cleary Gottlieb Steen & Hamilton to conduct the independent review.

Bidenomics is a hit — But only with foreign governments that have identified the administration’s policy mix as a way to boost clean energy companies without alienating the right wing, our Karl Mathiesen, Zack Colman and Charlie Cooper report. “It’s probably the most impressive piece of legislation in my lifetime,” former diplomat Marc-André Blanchard, an executive at Canada’s biggest pension fund, told POLITICO at the sprawling venue of the COP28 U.N. climate talks in Dubai.

Student loans — Senate Majority Leader Chuck Schumer and other top Democrats are growing worried that Biden’s second student debt cancellation program won’t provide enough relief, our Michael Stratford writes.

ESG — House Judiciary Chair Jim Jordan (R-Ohio) issued subpoenas for Vanguard Group and Arjuna Capital as part of his committee’s investigation into environmental, social and governance policies, our Alison Prang reports.

The next big thing — The Cayman Islands and British Virgin Islands offered world’s billionaires a respite from being taxed in their home countries. Now, they go to Abu Dhabi, Bloomberg’s Ben Bartenstein reports.

Crypto kings — With FTX’s Sam Bankman-Fried and Binance’s Changpeng Zhao facing sentencing on criminal charges, crypto industry chief executives are racing to fill a leadership void, NYT’s David Yaffe-Bellany reports.

Adrienne Elrod recently departed the Chips Program Office at the Department of Commerce, where she served as external and government affairs director. She is relaunching Elrod Strategies, where she will advise corporate and political clients on strategic communications, public affairs and government relations. — Daniel Lippman

Tim Ursprung is joining Venable’s financial services lobbying team from Tonio Burgos & Associates. He previously worked for Rep. Peter King (R-N.Y.).