24 Mar 2015
US inflation to gradually pick up - Capital Economics
FXStreet (Bali) - John Higgins, Capital Economics' Chief Markets Economist, is expecting US inflation to gradually pick up in the next few months, in anticipation of a partial recovery in Oil and improved US labour conditions.
Key Quotes
"Today’s US CPI release has the potential to move markets given the FOMC’s desire to see some stabilisation in core inflation before beginning to normalise monetary policy."
"That being said, the behaviour of inflation expectations over the next few months is also likely to play a key role in determining when the Committee starts to raise its target for the federal funds rate."
"Downward pressure on inflation expectations from Oil prices should ease, helping to offset any effect from further strength in the dollar."
"Meanwhile, the ongoing recovery in the US labour market should eventually put much greater upward pressure on wage and core inflation than many seem to be anticipating."
"Indeed, we suspect that this development will not only bolster expectations for inflation itself, but also prompt FOMC participants to reassess how quickly they are likely to need to act."
Key Quotes
"Today’s US CPI release has the potential to move markets given the FOMC’s desire to see some stabilisation in core inflation before beginning to normalise monetary policy."
"That being said, the behaviour of inflation expectations over the next few months is also likely to play a key role in determining when the Committee starts to raise its target for the federal funds rate."
"Downward pressure on inflation expectations from Oil prices should ease, helping to offset any effect from further strength in the dollar."
"Meanwhile, the ongoing recovery in the US labour market should eventually put much greater upward pressure on wage and core inflation than many seem to be anticipating."
"Indeed, we suspect that this development will not only bolster expectations for inflation itself, but also prompt FOMC participants to reassess how quickly they are likely to need to act."