14 August 2024
If you are covering the latest inflation data from the US, please find below a comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“Today’s US inflation figure clears the runway for the Federal Reserve to initiate a rate cut at its September meeting. The 2.9% reading is just under expectations of 3%, while core inflation has remained stable at 3.2%. The last thing the Fed and the market will have wanted prior to the next meeting was any surprises in the data, and while some may still appear, inflation is at least playing ball and that is the most important data point to consider still.
“Clearly there is some concern that the economic slowdown in the US is more severe than is currently being presented by the data. This has caused market jitters of late, but investors should be calmed knowing that rate cuts are coming. However, where there is still a disconnect, as there was at the beginning of the year, is in the expected pace of these rate cuts. The market is potentially getting ahead of itself once again and expecting more cuts than will necessarily be delivered. The economic picture is one of a weaker consumer and businesses coming under pressure, but they remain stable enough and as such rates will not come down quickly.
“There are still external factors to consider, such as the escalation of tensions in the Middle East, but for now today’s inflation figure suggests a soft landing is still in play and the Fed has not moved too late.”
