Laith Khalaf, head of investment analysis at AJ Bell, comments on the latest US inflation figures:
“US inflation has cooled to 5%, which suggests the cure of higher interest rates is working. But core inflation remains stubbornly elevated, and that will continue to cause concern at the Federal Reserve, even if they choose to pause their rate-hiking activities.
“The turmoil in the banking sector has been a gamechanger, with tightening credit conditions expected to do a lot of the heavy lifting when it comes to cooling the US economy. That relieves pressure on the central bank to push rates up further.
“With inflation falling and some froth blown off the labour market too, it’s little wonder that markets are starting to turn their attention to when rates might start to be cut.
“Current market pricing suggests that US rates will be 0.5% lower by the end of the year. This is a significant shift in expectations, and signals a sea change in monetary policy might be approaching.”
