Inflation continues to retreat: spotlight on FED and ECB moves

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“The United States, initially with a notable advantage in the fight against inflation, now finds itself in second position compared to Europe which, with inflation at 2.4%, is closest to the 2% target set by central banks “.

This is what we read in the analysis by Richard Flax, Chief Investment Officer of Moneyfarm, underlining that the United Kingdom closes the ranking, with the price level at 4.6% in October. The next ten days will be full of macro events, with monetary policy meetings of the Fed, BoE and ECB, followed by Eurozone and UK inflation readings next week.

Overall inflation in the United States – writes Flax – has, in fact, gone from 3.2% on an annual basis in October to 3.1% in November, while core inflation remained stable at 4%: both data published today they proved to be in line with market expectations. The slight decline in inflation is mainly attributable to the easing of pressure on energy prices, which fell by 5.4% on an annual basis.”

For Flax, “today’s findings should not significantly influence the markets’ perception of the Fed’s next monetary policy moves, which is expected to keep interest rates unchanged during today’s meeting. In particular, with inflation core at 4%, to date there are no conditions for an early rate cut by the US central bank”.

Meanwhile, the US data prompted Treasury Secretary Janet Yellen to speak of “a soft landing”, meaning that “the economy continues to grow, the job market remains strong and inflation falls”. According to Yellen – who spoke at the Wall Street Journal CEO Council Summit in Washington, underlining that inflation is “certainly decreasing significantly” – there will be no particular difficulty in “walking the last mile” to bring inflation back to 2%. of the Federal Reserve’s target. The Fed is therefore expected to keep rates unchanged for the third consecutive meeting.

There is also great anticipation for the ECB’s move – There is also great anticipation for the last meeting of the Eurotower Board of Directors of the year, scheduled for tomorrow, Thursday 14 December. Even in this case, the atmosphere seems to have changed: the slowdown in inflation and the cooling of the economy make another rate increase “very unlikely” even for the hawks while discussions begin on the timing of the cuts in view of the New Year.

This article is originally published on teleborsa.it

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