The latest U.S. inflation data from this week would suggest a slowdown in the rate of inflation – signalling an end to rate hikes this year.
Over the past several months, the Fed has been aggressively hiking interest rates to cool down inflation which currently sits around the 4% mark. While headline inflation has been falling from its peak, other central banks around the world have continue to increase interest rates as inflation remains high.
In recent weeks, both the Bank of England and the ECB have stepped in with hikes as food inflation becomes a concern, especially in Britain which has seen double digit inflation figures for food and a stubbornly high core inflation reading.
As the U.S. economy continues to move along, albeit at a slower pace of growth, the Fed may be about to put the brakes on further hikes. Evidence of price pressures have already emerged in the real estate market in some states which have seen steady falls since the beginning of the year as mortgage costs remain high.
Some recent reports indicated the economy is now moving into disinflation territory which could further ease monetary policy in the months ahead, however international shocks and a steady rise in energy prices could keep inflation holding above the preferred 2% mark well into 2024.