13 November 2024
If you are covering the latest US inflation rate, please find below a comment from Lindsay James, investment strategist at Quilter Investors:
“While US inflation coming in line with expectations means no nasty surprises for markets, the real quandary for the Federal Reserve is what do they do with rates from this point. President-Elect Trump is busy putting his team together ahead of January’s inauguration and it is clear where the policies lie. Taxes will be cut at the same time as fiscal expansion, resulting in ever greater deficits and the potential for a reinflationary spike. US inflation is proving rather stubborn to get at or below target, unlike other developed economies in Europe, so any rate cuts again this year appear like they might just have to be reversed again should inflation spike.
“Over the last 12 months in the US the cost of all goods and services have risen. Across the board tariffs, and the retaliatory action other states will take, will simply continue to push those costs upwards. This remains a US economy that is proving very robust and with an impending sugar high from Donald Trump on the horizon, it will continue to hit new highs.
“However, having warned multiple times that rates will be higher for longer, this appears it will not definitely be the case. Despite it seeming under control, inflation remains one of the most important data points around and will continue to be key driver of the Fed’s decision making. How this goes against Trump’s economic policies will be interesting to watch and could spark some fresh volatility in markets over the medium-term.”
