Payden & Rygel: Global core inflation trend

Payden & Rygel: Global core inflation trend

June 7, 2024

Interest Rates Central bank Monetary policy
Rente (04) inflatie

June 2024 kicked off with three global central banks reducing policy rates: the Bank of Canada, the ECB, and the Central Bank of Denmark, as policymakers in all three areas saw core inflation moving sustainably towards their respective inflation targets.

Although the rate cuts were widely expected ahead of the meeting, most investors wondered if the move signaled the start of a global 'cutting cycle', with the Fed following soon. We're not so sure - and neither are the policymakers.

First the Fed need not follow. As BoC Senior Deputy Governor Carolyn Rogers reflected: 'What is remaining for most [policymakers] is more about what's in [their] domestic economies, so it's logical that we are going to diverge a bit.'

Second, it might be too soon to start expecting a string of rate cuts globally. In ECB Governor Lagrade's words, policymakers 'are not pre-committing to a particular rate path'.

While global inflation pressures have cooled, core inflation remains well above its pre-Covid trend, driven more by domestic factors affecting each country.

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