What is particularly notable at the moment is that inflation almost everywhere is lower than desired. The only place where inflation is close to where the central bank would like it is the US, where CPI ex Food & Energy is running at 1.9%. Even so, other measures in the US are weak. For example, the PPI ex Food and Energy index at the end of October was only 0.1% higher than a year earlier.
It is also notable that in general, inflation data around the world are still coming in lower than expected and also lower than the previous month. In such an environment one would have thought that despite the talk to the contrary there is still a decent chance that the Fed will hold off raising rates at its December meeting.
Published in Investment Letter, December 2015
The views expressed in this communication are those of Peter Elston at the time of writing and are subject to change without notice. They do not constitute investment advice and whilst all reasonable efforts have been used to ensure the accuracy of the information contained in this communication, the reliability, completeness or accuracy of the content cannot be guaranteed. This communication provides information for professional use only and should not be relied upon by retail investors as the sole basis for investment.
Comments