NAB Morning Call Inflation eases and fears subside
7 snips
Jan 15, 2025 Ken Crompton, NAB’s market economist, shares insights on the recent CPI data, revealing its potential to prompt multiple Fed rate cuts this year. He discusses how declining inflation is impacting bond markets, causing yields to fall across the globe. Crompton also highlights the surprising employment data from Australia, pondering whether it indicates a tight labor market or prompts a shift in the RBA's inflation views. The geopolitical ceasefire in the Middle East barely affected market responses, with optimism prevailing in equities and bonds.
AI Snips
Chapters
Transcript
Episode notes
Inflation Eases
- US inflation was lower than expected, causing a positive market response.
- This increases the likelihood of the Fed cutting rates more than once this year.
Rate Cut Expectations
- The lower inflation rate likely eliminates discussions of further rate hikes.
- The market is now pricing in a higher chance of two rate cuts than one.
Fed Reaction
- Fed officials express confidence in the softer core CPI measure.
- Williams believes the rise in bond yields reflects economic strength and fiscal uncertainty, not tightening.