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US inflation slows to 3%

Despite the slowdown, it remains above the Federal Reserve target

12 July 2023

Inflation in the US continues its apparent slowdown. Headline inflation fell to 3.0% year-on-year, slightly below the expected 3.1%. On a monthly basis, inflation rose by 0.2%, below estimates of 0.3%. Markets now expect just one more hike of 25 bps from the Federal Reserve (Fed) next week and rates to start falling next year. Inflation has certainly fallen from the peak but before we all get too obsessed on one particular monthly data point, inflation is still well above the Fed target of 2% and will likely remain sticky for months to come – how this translates into Fed policy will likely disappoint market expectations as they are right now.

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Charles Hepworth

Investment Director
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