Damon

Despite the significant financial market turbulence and pronounced currency fluctuations that several East and Southeast Asian economies have faced this year...

The latest CPI report suggests a moderation in inflationary pressures. Energy prices, due to the lagged effect between gasoline and crude oil prices, did not make significant contributions to the decrease in CPI inflation this time. On the other hand, housing inflation only slightly slowed its pace of increase. Both factors remain the primary drivers of "persistent" inflation.

Current market pricing oscillates between expecting 1-2 interest rate cuts this year, and the data's performance could influence the balance of power within the Fed. The latest inflation report may serve as a crucial reference for whether the Fed can initiate its first rate cut in the summer.

Governments may take measures to appreciate their currency prior to elections, with a high probability of depreciation occurring after a new government takes office. Recent elections in some emerging markets and developing economies (EMDEs) have once again demonstrated that mainstream currency depreciation is more likely to occur after elections.

Homeowners with low-rate mortgages are expected to maintain their current status quo, refraining from putting their homes back on the market for resale. Additionally, the market is poised to experience increased demand from millennials and first-time buyers in the future.

Non-farm payrolls came in sharply lower than expected, boosting expectations of interest rate cuts. The market regained its expectations of two rate cuts this year, bringing forward the Fed's first rate cut from November to September. If the subsequent inflation data also declines, it will completely fuel the expectation of rate cuts.

The latest inflation report has reduced the market's expectations of interest rate cuts by the Federal Reserve. How long will the Fed maintain the current interest rates?

Since the onset of the Russo-Ukrainian War in 2022, inflation in major global economies has peaked successively, with a recent downturn observed. Subsequent inflationary trends still require close attention, particularly regarding energy prices and housing inflation.

It seems that interest rates have peaked in the current hiking cycle. Some countries, such as Switzerland, have even started lowering interest rates. But will inflation reverse?