Mixed US inflation data gives no clear signal to markets

This week has seen inflation take centre stage once more. US headline inflation fell as expected, but core inflation ticked up slightly. This means rate hikes remain a live issue for the US Fed as other data shows the US economy remains robust. The minutes from the last interest rate meeting show Fed officials expect a mild US recession but the relatively calm market reaction shows that investors’ views have not significantly changed.

Meanwhile the chancellor has given an indication that the UK could be voting in a general election this time next year. In an interview at the International Monetary Fund conference in Washington, Jeremy Hunt said the government would call an election when the economy was starting to improve. While he said the IMF’s forecast for a 0.3% contraction this year is too gloomy, he agreed the UK will return to growth next year and expects inflation to be under 3% by the end of 2023. A lot has to go right for the government between now and then, but it appears the chancellor is keen to get to the polls as soon as possible to make the most of any positive sentiment.

For the following stories, please click on this link*

• Inflation – US inflation data presents a mixed picture, but markets still expect rate hikes to end soon.
• UK – MIMF predicts recession and meagre growth in 2024.
• Equities – Chinese demand provides a boost for luxury brands

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