US Fed Chief Uses Sustainably Word Again on Inflation

On Monday, Jonathan Haskel, a member of the Bank of England’s Monetery Policy Committee suggested he “would rather hold rates” until inflation has “subsided sustainably”.

On cue, yesterday, Federal Reserve chair, Jerome Powell suggested interest rates would remain with the range 5.25% to 5.50% until inflation moves “sustainably towards 2%”.

Economic data from the US in the first six months of 2024, still shows a strong economy and therefore tubborn inflation.

Comment

US inflation figures are due to be published tomorrow and are expected to fall just 0.2% to 3.1%.  This is still more than 50% higher than the Fed’s target of 2% pa.

“Sustainable” lower inflation appears to be the target ‘both sides of the big bond’, so we do not expect rate cuts on 31^st July by the Federal Reserve or next day on 1^st August by the Bank of England. 

We still expect rates to be cut in Autumn although we now lean towards 18^th Sepetmber for the Federal Reserve and surprise, surprise by the Bank of England on the 19^th September.