Economic Update: Inflation Gauges Hit 2021 Lows, Hinting at End to Interest Rate Hikes

(Bloomberg) — US and euro zone inflation gauges are anticipated to reveal the smallest annual increases since early or mid-2021, solidifying the belief that interest rates won’t be hiked again.

Expected on Thursday, the Federal Reserve’s preferred measures will show the personal consumption expenditures price index rising 3.1% from a year ago in October. Meanwhile, the underlying core measure, expected to have climbed 3.5%, excludes food and fuel and is considered a better gauge of underlying inflation.

Also due on Thursday, euro-region data for November will likely show inflation at 2.7%, the lowest since July 2021, with the underlying measure seen slowing to 3.9%.

Central banks on both sides of the Atlantic are seeking more evidence to confirm that consumer prices are consistently under control, with European Central Bank President Christine Lagarde emphasizing on Friday that “we’re certainly not declaring victory.”

Fed officials are united around the strategy of maintaining a deliberate policy path, with higher rates beginning to impact households and businesses.

Sluggish inflation impulse in October will likely enable the Fed to stay on hold through the year-end. On Wednesday, the government will release the first revision to third-quarter gross domestic product. Meanwhile, Canada will release third-quarter GDP data and jobs numbers for November and Asia will present its Central bank governors on Monday and the Bank for International Settlements conference.

The coming week will feature the release of several reports by ratings companies, as well as appearances from several Bank of England policymakers. As for Latin America, activities include mid-month consumer prices index in Brazil and an inflation report by Mexico’s central bank.


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