inflation a recorded recession in the united states In October, the figure came in at 3.2% year-on-year, compared to the 3.3% reported by analysts, while month-on-month growth was nil, compared to the consensus of 9+0.1%. a data better than expectedTherefore, which comes into a phase in which federal Reserve is already reconsidering its monetary policy strategy and that implies an approach more prudent Regarding possible increase in interest rates in future.

better than expected data

As mentioned, the consumer price index increased in October 0.1% month-on-month and 3.2% year-on-yearBelow the 3.3% expected by the market. basic indexwhich do not include energy and food, are more closely followed by the Fed, 4% increase That proved to be better than trends and analysts’ expectations, which indicated growth of 4.1%.

What will the Fed do?

fed he already has one “to break” and broke the recent upward adjustment cycle Rate of interestwhich were confirmed at current levels Al 5,25-5,50%, Powell has signaled that now is the time to stop and understand how inflation will escalate, although he has acknowledged several times that the possibility of new increases in the future cannot be ruled out. But these figures console the hopes of the most optimistic who expect rates to remain stable in December and are betting on inflation gradually returning to the target in the near term.

Analysts’ reactions

“Today’s data for the core consumer price index did not exceed expectations, leading to a rise in expectations,” he commented. lindsay rosnerLeading director of multi-sector investing for fixed income goldman sachs amAdding that “this should reinforce the Fed’s wait-and-see stance in December.”

Per Kelly CoxUS market analyst DI eToro, “The inflationary trend is clear. Price increases are slowing as supply and demand return to balance” and “this also makes the Federal Reserve’s outlook quite clear”, but the analyst noted “a sobering detail” which is that “services inflation (except rents) ) which is “that measure that Jerome Powell likes to point to, and it actually accelerated year-on-year in October. It would take the Fed to keep rates higher for longer. would be the main argument, but it’s just one fact in a sea of ​​other evidence that says the opposite.

“We believe that, for the December 13 meeting of the FOMC, the FED’s operating commission, the scenario is to keep interest rates in the 5.25%-5.50% range. “The data confirms that the FED’s current stance on monetary policy is restrictive enough to allow inflation to return to the 2% objective over the medium term”, confirms Philip DeodovichSenior Market Strategist IG Italy,

“We expect significant interest rate cuts by major central banks in 2024,” he says. steven bellChief Economist EMEA DI columbia threadneedle investmentHe added, “We recognize that the battle against inflation has not yet been won, but the winds are now blowing in our favor, bringing a sigh of relief for both bonds and stocks.”

Categorized in: