12 April 2023
If you are covering US inflation, please see comment from Marcus Brookes, chief investment officer at Quilter Investors:
"US inflation appears to be easing more than expected for the time being, suggesting that the Federal Reserve's actions to combat inflation are having a positive impact without pushing the economy into recession. However, core inflation, which excludes volatile food and energy costs, remains stubbornly high, keeping the possibility of further rate hikes on the table.
"Inflation will continue to be a primary factor in the Fed's decision-making process, but recent events, such as the failure of Silicon Valley Bank and other lenders, have started to impact market sentiment and hint at potential underlying strains in the US economy. Nonetheless, the Fed will be relieved to see no major unpleasant surprises in this inflation report, which should help stabilise the situation further.
"With the fallout from the Silicon Valley Bank still unfolding, the lack of consensus among top Fed officials on whether another quarter-point rate rise is necessary, and inflation following the predicted trajectory, a 25 basis point rise in interest rates seems like the most probable outcome for the Fed at its upcoming meeting. The fight against inflation is set to continue for the foreseeable future, and Jerome Powell has made it clear that he will take decisive action if needed.
"As the US economy has proven resilient in the face of numerous challenges, a sense of cautious optimism prevails. However, policymakers and market participants alike must keep a watchful eye on the evolving situation. In the meantime, the Federal Reserve will continue to strike a delicate balance between taming inflation and safeguarding economic growth, all while navigating the ever-changing landscape of global finance."
