US inflation figures provide 'enormous relief' but uncertainty over Fed action remains

Unclear on Fed policy later in the year

The fall in US inflation figures reported on Thursday (12 January) will come as an “enormous relief to investors everywhere,” according to commentators. However, there is still uncertainty about the ongoing policy of the central bank.

Annual US inflation came in at 6.5% in December 2022, falling from 7.1% the month before. Robert Alster, CIO at Close Brothers Asset Management noted that despite the decline being "widely expected", as the numbers are exactly in line with consensus expectations, it provided "enormous relief". He went on to say that any print higher "would have been really negative, and risk assets would have heavily sold off". Edward Park, chief investment officer at Brooks Macdonald, agreed, saying "financial markets heaved a sigh of relief". However, he noted there was a muted reaction across ma...