ECB and Fed to delay rate cuts to sustain disinflation
Significance Disinflation is underway on both sides of the North Atlantic, but it is not yet deeply entrenched, giving both central banks a reason to delay cuts. The ECB must contend with higher food prices and core inflation than the Fed; both central banks have cause to worry about strong labour m...
| Format: | Other/Unknown Material |
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| Language: | unknown |
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Emerald
2024
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| Online Access: | http://dx.doi.org/10.1108/oxan-db285238 https://www.emerald.com/insight/content/doi/10.1108/OXAN-DB285238/full/xml https://www.emerald.com/insight/content/doi/10.1108/OXAN-DB285238/full/html |
| Summary: | Significance Disinflation is underway on both sides of the North Atlantic, but it is not yet deeply entrenched, giving both central banks a reason to delay cuts. The ECB must contend with higher food prices and core inflation than the Fed; both central banks have cause to worry about strong labour markets. Impacts In a shift from late-2023, most investors do not now see a rate cut in the United States before May, and in the euro-area before June. Services inflation will take time to decline due to the delayed impact of strong wage growth, especially in the euro-area. Military hostilities in the Red Sea could fuel inflationary pressures, especially in commodities and heavy goods manufacturing. |
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