US inflation declines to 5%. From the perspective of the Fed, the data thus point in the right direction, economists at Commerzbank report.
“US inflation continued to fall significantly in March, from 6.0% to 5.0%. Not only did volatile energy prices fall noticeably, but there was also some slowing in the important shelter category.”
“The March inflation report should calm the Fed's nerves somewhat. Most price categories show an easing of price pressures, and this is even the case for rents. Moreover, a further decline in rent inflation can be expected in the coming months.”
“The Fed is now likely to focus its attention more on supporting the emerging positive trend. A more aggressive approach is probably no longer necessary in view of the progress made. The Fed nears its interest rate peak; we expect only two more rate hikes of 25 bps each.”
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