Latest outlook from HSBC for inflation and interest rates across the world’s major economies.
The most striking shift, during recent days and weeks, has been in the USA, where American inflation has repeatedly turned out higher than expected, and where we now expect the Federal Reserve to deliver steeper rate rises than had been previously anticipated. Specifically, we now expect the benchmark US policy rate, the “federal funds target rate” reach a range of 3.75- 4.00% by early next year.
By comparison, the stance adopted by the Bank of England has, so far, been rather more cautious: not only did it content itself, at the June MPC meeting, with just a quarter-point rise in UK Bank Rate, it also does not see much additional inflation being generated by the Chancellor’s recent measures to support household finances. This in turn implies less need for the kind of aggressive rate hikes being signalled by the Fed – though that picture could change by August, when the Bank of England will issue its next set of detailed forecasts for growth and inflation.
To view the full HSBC report, click here.