10 November 2022
If you are covering the news that US inflation has fallen to 7.7%, please find below a comment from Stuart Clark, portfolio manager at Quilter Investors:
“Inflation in the US has once again fallen, giving some momentum to the idea that the worst is now behind us. The rate is lower than expectations and this will provide some relief to consumers and the wider market, however it is worth noting food and shelter is still increasing, so not completely out of the woods yet. Inflation also remains stubbornly high, however, and as such the Federal Reserve is going to remain in a hawkish mood for some time to come. The jobs market remains strong, so for as long as inflation is this elevated and the economy doesn’t completely grind to a halt, the market will have to wait for any indication of a pivot or pause from the central bank.
“The picture in the US, however, still remains a little uncertain following the midterms on Tuesday. We are still awaiting the outcome of the Senate race, and while the Republicans are likely to take control of the House of Representatives, it has been far from the ‘red wave’ that was being spoken about in the run up. As a result, while it might be more difficult for the Biden administration to provide any further support or relief from inflation, it won’t be impossible. Inflation was a key concern for voters as higher prices have hit their financial capabilities. As a result, Democrats will want to see this number continue to fall at this rate as we now approach the presidential election cycle, especially given the noise that can cause.”
