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Significance
Disinflation is underway on both sides of the North Atlantic, but it is not yet deeply entrenched, giving both central banks a reason to delay cuts. The ECB must contend with higher food prices and core inflation than the Fed; both central banks have cause to worry about strong labour markets.
Impacts
In a shift from late-2023, most investors do not now see a rate cut in the United States before May, and in the euro-area before June.
Services inflation will take time to decline due to the delayed impact of strong wage growth, especially in the euro-area.
Military hostilities in the Red Sea could fuel inflationary pressures, especially in commodities and heavy goods manufacturing.
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2024
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