The US inflation rate is falling faster than expected

EconomieDec 13 22’22 5:11pmEdited Dec 14, 22 at 09:41author: Remy Cook

Inflation in the United States has fallen much faster than first thought. Where inflation was still there at 7.7% in October, it fell to 7.1% in November. But, as macro-American economist Phillip Marie of RaboResearch confirms, inflation is still very high.

A gas station in the United States. (ANP/Associated Press)

He says the reason it is now lower than before is due to the many surprises in recent months. “On the upside, analysts are generally more cautious about when they expect a pullback,” Mary says. But it went faster than many expected. So he is heading in the right direction.

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According to Mary, core inflation – inflation that excludes energy and food prices – has also fallen. “Tougher than expected, too,” he continues. It went from 6.3 percent to 6.0 percent. That is still high, and indicates that it will be a long time before we reach the 2 per cent rate that the central bank wants to reach. But the most important thing is that things are also getting better in a broad sense.

logical consequence

So Mary thinks it makes sense for the stock markets to react positively. “What you’re seeing is expectations of more rate hikes by the Fed being revised downward for next year,” he continues. “That’s relevant to stocks, and you can see that on the AEX but also on the S&P500.”

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Despite the revised forecasts for next year, Mary doesn’t think the low inflation rate will have an immediate impact on the numbers the Fed will release tomorrow. “We’re already going back from 75 basis points last time to 50 basis points this time, and I think that’s enough for now. That’s just one report. I think we’ll have to wait until the next Fed meeting to propose a 25 basis point hike “.

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While the Fed will present a new interest rate decision tomorrow, its European counterpart – the European Central Bank – will present a rate decision on Thursday. But it won’t be affected much either. Mary: “Europe is of course more sensitive to energy problems related to Russia, so in this respect the ECB will have to stick to the projected 50 basis points.”

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