Greater clarity on US inflation anticipated after presidential inauguration

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US headline inflation data for December was in line with expectations but core inflation surprised on the downside, as it rose by 3.2% y/y from 3.3%. This pushed up US bond and equity markets. Core inflation benefited from a moderation in the rate of increase in rentals. However, this does not affect the outlook for interest rates, with no cuts expected for the next couple of months.

A flurry of executive announcements is expected after US president Donald Trump is inaugurated. An increase in import duties is likely to exert upward pressure on inflation. Trump’s policies may also affect the overall growth rate but at this point the US economy is expected to remain strong.

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20 Jan English South Africa Investing · Business News

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