Goldman Sachs The Markets
Inflation cools, election heats up
Jul 12, 2024
Senior currency strategist Mike Cahill from Goldman Sachs Research discusses the impact of lower inflation on markets and how the US election is affecting currencies. Topics include market reactions to inflation data, implications for interest rates, currency market dynamics during the election, and potential impacts on currency pairs and policy responses.
08:18
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Quick takeaways
- Unexpected softness in inflation gives Fed flexibility for rate cuts.
- US election uncertainties impact market reactions and highlight tariff policy importance.
Deep dives
Implications of the CPI Print on Market Reactions and Fed's Path
The latest CPI print, significantly lower than expected at six and a half basis points, signals a positive trend in inflation reports, providing policymakers with confidence for a balanced approach. This unexpected softness in inflation allows the Fed room to maneuver without the urgency for immediate action, supporting a baseline expectation of two rate cuts for the year while conditions for inflation to return to target are favorable.
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