13 December 2022
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:
“Inflation continues to move in the right direction for the US, with today’s print coming in lower than expectations. As a result, the Federal Reserve will feel vindicated in its aggressive stance, while the markets will begin to think that the pain of tighter monetary conditions could soon be over. However, service inflation continues to buck the trend and is now the key metric to watch as we have seen that energy and goods price pressures are easing a bit.
“While the war against inflation is turning, we are a long way off declaring victory and the Fed will keep its hawkish stance for a while longer, even if it does potentially force a recession. We are still likely to see at least a 50bps rise in interest rates tomorrow from the Fed, but we cannot rule out further hawkish moves should other data points refuse to budge as quickly as investors would like. For now, though, a soft landing for the economy remains on the table and markets may just start looking more into the future for a pivot from the central bank.”
