United States: Inflation Slowing Down
BNP Paribas | May 17, 2017 03:20AM ET
Oil prices no more are increasing. Lately, they fell quite markedly with the West Texas Intermediate back below USD 50/Bbl. Even before that, their contribution to the overall inflation was getting smaller. As a result, the US CPI has already passed its peak, slowing from 2.7% y/y in February to 2.1% in April. Core prices excluding the cost of shelter are also slowing down, a development that feeds the hypothesis that output gap remains negative. The labour market might be very dynamic, under-employment probably remains greater than what implies the very low rate of unemployment (4.4% in April). All this explains why the Fed’s monetary policy still is very loose, and why we do not expect more than two rate increases until the end of the year.
by Alexandra ESTIOT
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