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Inflation trends will play a pivot role in US policy decisions - Nomura

FXStreet (Barcelona) - Research Analysts at Nomura note that as economic activity picks up and the labor market continues to tighten in the US, inflation trends will play an important and growing role in monetary policy decisions.

Key Quotes

“October’s CPI came in slightly stronger than expectations. However, the acceleration in core inflation was consistent with the recent pick-up in the employment cost index and tightening of labor markets more generally.”

“It appears that core inflation stabilized in September and October after some volatility earlier this year.”

“Although energy and food prices should decline in the near term, and the recent appreciation of the dollar should limit the growth in core goods prices for some months, we expect prices for core services to accelerate gradually as economic slack diminishes.”

“On the other hand, preliminary data from the University of Michigan consumer survey for November showed a surprising drop in long-term inflation expectations. We will closely watch the final reading of this metric which is scheduled to be released on 26 November and the NY Fed’s equivalent measure which will be released on 8 December.”

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