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U.S. inflation continues to decline

Data on consumer price dynamics in the US for October 2023 indicate a gradual slowdown in inflationary processes and provide cautious hope for a soft landing of the economy after the implemented monetary tightening. While the threat of a recession is not completely eliminated, the likelihood of this scenario is now lower than before.

According to the US Bureau of Labor Statistics, the Consumer Price Index remained unchanged in October compared to the previous month. On an annual basis, it increased by 3.2%, which is lower than the September figure of 3.7%. The actual inflation figures turned out to be slightly lower than expected. For example, the Federal Reserve Bank of Cleveland's nowcast was at 3.28%.

This is good news, and the stock markets have reacted accordingly. The reduced probability of an economic recession and the inflation rate approaching the desired 2% gives a cautious hope for a gradual reduction in interest rates next year. This, in turn, will stimulate overall economic growth, including within sectors that rely on borrowing such as housing. This optimistic scenario will have a positive impact on stock markets. However, it is important to remember that there are still factors of uncertainty and known risks, including geopolitical ones, which can affect the global economy.

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