Opinion
Sticky inflation in America signals risks
The latest US inflation data calls into question market expectations for heavy interest rate cuts this year.
Christopher JoyeColumnistThe big news on Thursday night was the surprisingly (for some) sticky US inflation data in December, partly driven by demand-side services inflation, which is a harbinger of precisely the risks that this column has repeatedly canvassed.
The future path for inflation remains this year’s existential question: that is, will it straight-line back to the central banks’ 2 per cent targets, allowing the US Federal Reserve, in particular, to furnish the 150-160 basis points of rate cuts that are being boldly priced into markets over the next 12 months? The presumption of aggressive monetary policy easing in 2024, with the Fed remarkably forecast to start cutting as soon as March, is the critical plank underpinning all speculative asset valuations at present.
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