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Macro is 'indicative' of a downward trend in inflation

Concern with US inflation is back to the fore after clear signals of sticky and reaccelerating services inflation in the first quarter.

Our view is that the key factors that drove high inflation, including loose monetary policy, fiscal largesse and supply constraints, have mostly reversed. While the US job market remains tight, the supply-demand imbalance in labour has improved meaningfully. The ratio of job openings to the number of unemployed has dropped from a high of 2.0 in mid-2022 to 1.3 in March 2024. Even as job gains remained strong, wage growth continued to slow due to higher immigration (hence a bigger pool of available workers). BoE hold 'made sense' amid General Election-induced 'vow of silence' ...