The reason it’s lower now than before is due to the many surprises in recent months, he says. “On the upside, so analysts are generally more cautious about when they expect a decline,” Marey says. But it went faster than many expected. So it’s going in the right direction.’
Core inflation, inflation that doesn’t take into account energy and food prices, has also declined, according to Marey. “Even harder than expected,” she continues. ‘It went from 6.3% to 6.0%. It is still high and indicates that it will take a long time to reach the 2% that the central bank wants to reach. But the most important thing is that things are also improving in a broader sense».
Logical consequence
Marey therefore deems it logical that the equity markets react positively. “What you are seeing is expectations for further Fed rate hikes being revised downwards for next year,” he continues. “This is supportive for equities, and you can see it on AEX but also on the S&P500.”
Although expectations for next year have been revised, Marey doesn’t think the lower inflation rate will have an immediate effect on the numbers the Fed will announce tomorrow. “We’re already coming back from 75 basis points last time to 50 basis points this time, and I think that’s enough for now. This is just a report. I think we will have to wait until the next meeting for the Fed to suggest a 25 basis point rate hike.”
Hole
While the Fed will present a new interest rate decision tomorrow, its European equivalent – the ECB – will present an interest rate decision on Thursday. But it won’t hurt much. Marey: “Europe is obviously much more sensitive to the energy problems linked to Russia, so in this sense the ECB will have to stick to the 50 basis points foreseen”.