Deutsche Bank says there is tentative evidence that US core inflation is settling around 3%. And that is triggering some concern at the Fed.

  • lower gas prices should help headline drop
  • but we expect core to edge up
  • core is remaining stubborn
  • The consensus suggests that the Fed have pretty much won the battle on inflation, and markets have certainly got very excited about a potential dovish pivot ... But this is far from the first time that hopes for a dovish pivot have caused excitement, and if core is sticky around 3% then there’s little doubt that the Fed will look to tighten policy again.
  • It was notable that Chair Powell said last week that they were aiming for a sufficiently restrictive stance of policy, but “we are not confident that we have achieved such a stance”.


Powell waking up