Inflation in the US is under control much better than initially expected. This is what financial markets professor Arnoud Boot says. “And while it initially seems negative that the number of new jobs in the US was much lower than expected last quarter, that was exactly what the economy needed: to cool.”
Boot also refers to the cooling of the labor market and the wage price spiral playing a role in the background. “It means that inflation in the US has simply come out much lower than originally expected,” he says.
“It means that inflation in the US has simply come out much lower than originally expected”
However, he points out that core inflation is still at 4.8%, much higher than the Federal Reserve’s desired rate. “Inflation won’t go away, of course,” she continues. Boot then calls it a signal that there is a – hitherto unexpected – cooling in the labor market, “and if this continues, this is a key mechanism to further bring inflation under control.”
Sod on the dam
And so the Fed’s interest rate policy is making a difference, Boot says. More than he initially expected. Especially as Fed Chief Jerome Powell skipped a hike in the earlier interest rate decision. “He gave a clear signal that he expected further hikes,” explains Boot. “And it will happen again. But the picture was much more positive.
Unexpected, but also positive, is the fact that business investment has been much higher than initially anticipated. And according to Boot, that speaks volumes about the underlying dynamics of the US economy. “At the end of the day, I will always see the US economy as something that drives the global economy,” she concludes. “And I think we’re seeing it again now.”
Source: BNR
Sharon Rock is an author and journalist who writes for 24 News Globe. She has a passion for learning about different cultures and understanding the complexities of the world. With a talent for explaining complex global issues in an accessible and engaging way, Sharon has become a respected voice in the field of world news journalism.
