Will inflation soon peak?

This week the Bank of England and the US Federal Reserve joined the European Central Bank to complete a triumvirate of 0.75% interest rate hikes. The tone taken by the US and UK banks was noticeably different. US Fed chair Jerome Powell was keen to point out that financial markets’ expectations for interest rate are too optimistic. Positive employment figures in the US points to the job market remaining robust and so Powell was keen to emphasis that further hikes are likely to be necessary. The Fed is not for turning, or at least not yet.

In the UK, governor Andrew Bailey was a bit more conciliatory towards markets and said inflation is now expected to peak at 11% this year as he suggested that the hikes already in place may be enough to bring inflation below the 2% target in two years. The bank’s more pessimistic forecast sees inflation peak next year with more aggressive tightening required. In both scenarios the bank now predicts a prolonged period of recession but, with economic data continuing to deteriorate, this doesn’t need much crystal ball gazing at Threadneedle Street.

For the following stories, please click on this link*

  • Interest Rates – US & UK central banks continue to hike aggressively
  • Global – Further signs of a widespread economic slowdown
  • Equities: Property under pressure from rising rates

(*Please note, The contents of this e-shot been prepared for general information only. It does not contain all of the information which an investor may require in order to make an investment decision. If you are unsure whether this is a suitable investment you should speak to your financial adviser. This information is not guaranteed to be correct, complete, or accurate. FE Research is a division of Financial Express Investments Ltd, registration number 03110696, which is authorised and regulated by the Financial Conduct Authority (FRN 209967). For our full disclaimer please visit www.financialexpress.net/uk/disclaimer. Data Sourced from FE Analytics, and Bloomberg Finance LP.)

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