current
Moderating Inflation
Inflation is gradually decreasing but remains sticky, particularly in the US services sector, impacting central bank policy.
Timeframe
near-term
Categories
Subcategories
Impact areas
Detailed Analysis
While inflation is moderating globally, the pace is slower than anticipated, especially in the US. "Inflation is moderating, albeit at a slower pace, notably in the US as services inflation remains sticky, delaying the first Fed cut to December." This stickiness is primarily attributed to persistent services inflation, which is influencing central bank decisions. The delayed Fed cut is impacting other central banks, with the ECB expected to cut once in September and then align its easing cycle with the Fed in 2025. Emerging market central banks are also exercising caution due to the Fed's delayed action.
Context Signals
Sticky services inflation in the US
Fed cut delayed to December
ECB to align easing cycle with the Fed
Edge
The prolonged period of higher interest rates could impact consumer spending and investment.
Emerging markets may face increased pressure on their currencies and capital flows.
Sectors less sensitive to interest rate changes, such as healthcare and education, may outperform.
