June 01, 2023
EA: HICP Inflation Resumes Trend Lower
- Flash EA inflation fell by 86bp to 6.11% in May-23, undershooting forecasts by 0.2pp. The outcome still resumes the downward trend since the Oct-22 peak.
- Germany was the primary geographic source of the downside news for us, but energy prices were the weakest area. Transport, housing, and food are driving inflation down.
- We expect another fall for similar reasons in June, albeit slightly smaller. Excessive underlying inflationary pressures remain inconsistent with reaching 2% sustainably.
By Philip Rush
May 31, 2023
Jefferson - Financial Stability and the U.S. Economy
Financial Stability and the U.S. EconomyMay 31, 2023
UK-US Peak Pricing
- A substantial repricing of the monetary policy outlook embraces our “tighter for longer” theme. However, pricing may have overextended the UK relative to the US.
- The US cycle is proving even more resilient than the UK, albeit without the worryingly excessive inflation expectations in wage settlements.
- With 25bp BoE hikes almost entirely priced at the following four meetings, while the Fed grinds to one, further frontend repricing seems likely to shrink the BoE-Fed spread.
By Philip Rush
