Did you know that despite the common perception of constant economic turmoil, historical trends often show a resilient return to stability, for instance, after significant spikes, inflation rates typically realign towards targets set by central banks?

This illustrates how the economy is always changing, with no reason to panic.

In this edition of our newsletter, we explore three economic topics:

• ECB Still Set To Cut Rates: First, the European Central Bank plans a rate cut, focusing on regional rather than global inflation signals, despite high US rates ✂️

• Stickier Than Expected Inflation Further Undermines Biden: Next, persistent inflation undermines significant job gains in the US, which will impact President Biden’s chances for re-election 👎

• Nevertheless, Inflation Is Still Headed In The Right Direction: Finally, recent reports suggest inflation is steering towards the Fed's 2% target, with easing job market tensions and wage pressures 👍

Stay informed with Equity Eats as we analyze these developments, helping you anticipate, not just react to, market movements.

ECB Still Set To Cut Rates ✂️

Stronger than forecast US inflation figures caused a stir in the market as European Central Bank rate-setters sat down for dinner in Frankfurt two weeks ago.

But ECB members seem to be toughening their resolve to focus on economic trends in Europe and set aside inflation trends in the US and what the Federal Reserve might or might not do.

While the ECB kept its benchmark deposit rate at an all-time high of 4 per cent, it signaled a cut is likely in June.

The ECB’s bottom line is best summed up by one unnamed member of the ECB:

“All colleagues agree we should diverge from the Fed — everything here is pointing to a reduction of inflation.” 📉

Stickier Than Expected Inflation Further Undermines Biden 👎

Stubborn inflation in the first three months of the year is further complicating Biden’s electoral chances in what is already shaping up to be an uphill battle.

Even though the US economy has created more than 15mn jobs under Biden’s watch, the jump in inflation during his tenure has cast a cloud over his handling of the economy and remains one of his biggest political weaknesses heading into the November vote 🗳️

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Nevertheless, Inflation Is Still Headed In The Right Direction 👍

The Labor report for April showed that the jobs market is loosening, and wage pressures are moderating faster than expected.

The wage-price spiral that so many investors and economists worry about is not unfolding.

In the months ahead, it will be more clear that inflation is indeed headed back down to the Fed’s 2% inflation target 🎯

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