ABN Amro: US inflation likely to remain benign over 2019-20

ABN Amro analysts are expecting the US inflation to remain benign over 2019-20, while they suggest that the Fed will be comfortable keeping rates on hold.

Key Quotes

“First, higher productivity growth is keeping unit labour cost growth in check, even as wage growth accelerates.”

“Second, inflation expectations remain very well-anchored, with if anything downward pressure of late from the fall in oil prices.”

“Finally, the still-low labour share of income suggests ample room for businesses to absorb higher labour costs, even if productivity growth falters again and unit labour cost growth rebounds.”