The thing to note about this picture is that it doesn’t tell the whole story. But what is evident at least is that price pressures have definitely eased compared to what we saw last year. This at least provides some hope that inflation is on the right trajectory to move back towards the 2% mark that central banks desire.

However, what is also important to keep in mind is the level of core inflation, and this particular measure is still relatively high for many of the economies mentioned above.

Until we see this show further signs of easing as well as a move back towards the 2% mark, policymakers will feel confident enough to start backing away from talking about further monetary tightening.

That said, that doesn’t mean we won’t see some sort of “pause.” The current story is that they will still want to keep rates higher longer. But the definition of that—especially the term “longer”—depends a lot on how the economy holds up and how quickly inflation may decline in the coming years.

Source Link